INTERNATIONAL FOODPOLICY RESEARCH INSTITUTEsustainable solutions for ending hunger and poverty

Social Protection for Inclusive Growthfor Inclusive Growth

Marie Ruel Marie Ruel International Food Policy Research Institute International Food Policy Research Institute

May 15, 2008May 15, 2008BrusselsBrussels

Economic Growth vs. Social Protection

Economic growth alone is not enough to cut poverty/hunger rapidly and with equityParticularly true where:

High inequalityBad governance

What is needed: Pro-poor growth + M i t t i i l t tiMore investment in social protectionImplemented earlierImplemented at larger scaleImplemented at larger scale

What is the Role of Social Protection?Protective Preventative Promotional Transformational

Secure basic consumption

Reduce fluctuations in consumption

Enable people to save, invest, and accumulate

Build, diversify, and enhance use of assets

Transform institutions and relationships

Protective Preventative Promotional Transformational

consumption and avert asset reduction

accumulate throughreduction in risk and income

i ti

assets• Reduce access constraints

• Directly provide orloan assets

relationships• Economic• Political• Social

variation loan assets• Build linkages with institutions

P bli k

• Direct feeding

• Public works• Insurance (health, asset)

• Livelihoods programsConditional cash

•Food or cash transfers

Direct feeding• Subsidies

Livelihoods programs• Credit and savings

• Maternal and Child Health and Nutrition• Home-based care

for the ill

Conditional cash transfers

• Child and adult education/skills• Early childhood development

Social Protection & the Life Cycle

PensionElderly

Public WorksIncome generationAdults

School fee waivers & vouchersFood/Cash for schoolingSchool age

SPPrograms& Policies

Early Childhood DevelopmentPre-school

& Policies

Matl & Child Health & Nutrition

Food Cash Transfers

0-2 y old

Food, Cash TransfersPrenatal

Conditional Cash Transfer Programs g(CCTs)

Target cash transfers to poor households, Target cash transfers to poor households, f i hi HHf i hi HHoften to woman within HH often to woman within HH

Conditional on: Conditional on: Enrolling children in school Enrolling children in school Attending health services Attending health services gg

Some also fund supply side strengtheningSome also fund supply side strengthening

Examples of ProgramsExamples of Programs

Progresa/OportunidadesProgresa/Oportunidades (Mexico)(Mexico)BolsaBolsa AlimentaçãoAlimentação (Brazil)(Brazil)Bolsa Bolsa AlimentaçãoAlimentação (Brazil)(Brazil)PRAF PRAF (Honduras)(Honduras)R d d P t iR d d P t ióó S i lS i l (Ni )(Ni )Red de ProtecciRed de Proteccióón Social n Social (Nicaragua)(Nicaragua)Familias en AcciFamilias en Accióónn (Colombia)(Colombia)Red SolidariaRed Solidaria (El Salvador) (El Salvador) Bono SolidarioBono Solidario (Equator)(Equator)Bono Solidario Bono Solidario (Equator)(Equator)TurkeyTurkey

Mexico (PROGRESA/Oportunidades)Mexico (PROGRESA/Oportunidades)

As of 2004, 5 million families, 25 million As of 2004, 5 million families, 25 million individualsindividuals

Budget of US$ 2.5 billion or 0.3% of GDPBudget of US$ 2.5 billion or 0.3% of GDP

Average benefit received by beneficiary Average benefit received by beneficiary households: 20% of the value ofhouseholds: 20% of the value ofhouseholds: 20% of the value of households: 20% of the value of consumption expenditure before programconsumption expenditure before program

Impacts on Poverty ReductionImpacts on Poverty Reduction

In Mexico, In Mexico, PROGRESA PROGRESA reduced:reduced:Poverty by 8.2% Poverty by 8.2% y yy yPoverty gap by 23.6%Poverty gap by 23.6%Severity of poverty by 34.5%.Severity of poverty by 34.5%.Se e ty o po e ty by 3 5%Se e ty o po e ty by 3 5%

In Nicaragua, theIn Nicaragua, the RedRed increased:increased:In Nicaragua, the In Nicaragua, the Red Red increased:increased:Average per capita expenditures by 18% andAverage per capita expenditures by 18% andAverage per capita expenditures of theAverage per capita expenditures of theAverage per capita expenditures of the Average per capita expenditures of the poorest households by 30%poorest households by 30%

Impacts on Education (Enrollment)Impacts on Education (Enrollment)

30

20

25

30

oll

men

t p

oin

ts)

10

15

0

ng

e i

n e

nro

erc

en

tag

e p

Primary School

Secondary School

0

5Ch

an

(pe

Mexico

girl

sMex

ico b

oys

Hondu

ras

Nicara

gua

Cam

bodi

aBa

ngla

desh

Turk

ey

(Sources: Schultz 2001; Skoufias 2005; IFPRI 2003; Maluccio and Flores 2005; Filmer and Schady 2006; Ahmed 2006; Khandker, Pitt, and Fuwa 2003; Ahmed et al. 2007)

Impacts on Health and NutritionImpacts on Health and Nutritionpp

70

50

60

70

tag

e

20

30

40

ng

e (

perc

en

po

ints

Honduras

Mexico

Nicaragua

Colombia

0

10

20

Ch

an

-20

-10

Health visits Illness Growth monitoring Stunting

(Sources: Skoufias 2005; Gertler 2000; Hoddinott forthcoming; IFPRI 2003; Maluccio and Flores 2005)

C l i CCTConclusions on CCTs

Programs have played important role in:Programs have played important role in:Reducing poverty, improving quality of dietsReducing poverty, improving quality of dietsImproving health and education outcomesImproving health and education outcomesEmpowering womenEmpowering womenHuman capital formationHuman capital formation

Effectiveness depends on:Effectiveness depends on:Design, implementation, supply side responseDesign, implementation, supply side responseContextual factors (institutional, political, Contextual factors (institutional, political,

i l li l lsocioculturalsociocultural

Social Safety Nets C P t G thCan Promote Growth

1) Creating Assets1) Creating Assets

Conditional Cash Transfers: human assetsConditional Cash Transfers: human assetsBy promoting schooling and health of childrenBy promoting schooling and health of children

Public Works: physical assetsPublic Works: physical assetsBy improving infrastructure (e.g. roads, irrigation, By improving infrastructure (e.g. roads, irrigation, schools health clinics etc )schools health clinics etc )schools, health clinics, etc.)schools, health clinics, etc.)

Private Savings: financial assetsPrivate Savings: financial assetsE M i l i HH 10% f t fE M i l i HH 10% f t fE.g. Mexico: low income HH use 10% of transfers E.g. Mexico: low income HH use 10% of transfers for small investments, which leads to sustained for small investments, which leads to sustained ↑↑ in in consumption/capita in following 5 yearsconsumption/capita in following 5 yearsE.g. Bangladesh: compulsory savings imbedded in E.g. Bangladesh: compulsory savings imbedded in programprogram

2) Protecting Assets2) Protecting Assets

P t l f t f ll i h kP t l f t f ll i h kPrevent loss of assets following shocks Prevent loss of assets following shocks (floods, drought, civil strife):(floods, drought, civil strife):

Shocks can directly destroy assets (e g loss ofShocks can directly destroy assets (e g loss ofShocks can directly destroy assets (e.g. loss of Shocks can directly destroy assets (e.g. loss of livestock) livestock) Shocks may lead to asset sales to smooth Shocks may lead to asset sales to smooth yyconsumption consumption Income shocks can lead to lower investment in Income shocks can lead to lower investment in schooling or health of children ith longschooling or health of children ith long lastinglastingschooling or health of children, with longschooling or health of children, with long--lasting lasting consequences consequences

E g drought in Zimbabwe led to childhoodE g drought in Zimbabwe led to childhoodE.g. drought in Zimbabwe led to childhood E.g. drought in Zimbabwe led to childhood stunting and reduced schooling stunting and reduced schooling

(impact:14% loss of lifetime earnings)(impact:14% loss of lifetime earnings)

3) Allowing more effective use of ) gresources + risk taking

Threat of shocks leads to:Threat of shocks leads to:Low risk livelihood strategiesLow risk livelihood strategieso s e ood st ateg eso s e ood st ateg es

Avoidance of new technologies or creditAvoidance of new technologies or credit

Resulting in lower productivity (e g India andResulting in lower productivity (e g India andResulting in lower productivity (e.g. India and Resulting in lower productivity (e.g. India and Tanzania, this Tanzania, this ↓↓ farm profits by 25farm profits by 25--50%)50%)

SSN act as form of insurance:SSN act as form of insurance:SSN act as form of insurance:SSN act as form of insurance:Motivates poor HH to take risksMotivates poor HH to take risks

Allo s q icker reco er from shocksAllo s q icker reco er from shocksAllows quicker recovery from shocksAllows quicker recovery from shocks

Reduces permanent consequencesReduces permanent consequences

4) Facilitating structural policy ) g yreforms

Economic reforms that promote overall growth Economic reforms that promote overall growth often incur costs of adjustment for some often incur costs of adjustment for some population segmentspopulation segmentspopulation segmentspopulation segmentsSafety nets can promote political acceptance of Safety nets can promote political acceptance of new policies by offsetting some of these costs new policies by offsetting some of these costs p y gp y g(compensation)(compensation)

E.g. Mexico introduced transfers to small E.g. Mexico introduced transfers to small farms when adopting freer trade. The farms when adopting freer trade. The

l l d t i d d ti bl l d t i d d ti bprogram also led to increased production by program also led to increased production by serving as a source of cash for inputs and serving as a source of cash for inputs and

as a form of insuranceas a form of insurance

5) Reducing Inequality5) Reducing Inequality

Effective targeting helps get the transfers to Effective targeting helps get the transfers to the poor:the poor:

Community targetingCommunity targeting

Household targeting using income proxies or other Household targeting using income proxies or other targeting approachestargeting approaches

This helps reduce inequality. By reducing This helps reduce inequality. By reducing inequality social protection policies can inequality social protection policies can yycreate conditions for growth to occurcreate conditions for growth to occur

K I i P Ch iKey Issues in Program Choice

Levels of specific human capital disadvantageLevels of specific human capital disadvantageDesired outcomes, where, for whom? Desired outcomes, where, for whom? Reasons for these deficienciesReasons for these deficienciesAdministrative capacities Administrative capacities Capacity of supply side to deliver with qualityCapacity of supply side to deliver with qualityCapacity to monitor complianceCapacity to monitor complianceCosts and resources available over timeCosts and resources available over timePolitical supportPolitical supportpppp

C l iConclusions

SPP i li lih d f th llSPP i li lih d f th llSPP can improve livelihoods of the poor, allow SPP can improve livelihoods of the poor, allow their productive participation in economytheir productive participation in economyOther components of development strategies:Other components of development strategies:Other components of development strategies: Other components of development strategies: good governance, functional infrastructure, good governance, functional infrastructure, schools & health, etc. schools & health, etc. Effective SSN programs have:Effective SSN programs have:

Clear objective and sound designClear objective and sound designFeasible and effective targeting mechanismFeasible and effective targeting mechanismFeasible and effective targeting mechanismFeasible and effective targeting mechanismEffective and reliable implementationEffective and reliable implementationStrong M&EStrong M&ETransparency in operations good communicationTransparency in operations good communicationTransparency in operations, good communicationTransparency in operations, good communicationStrong political commitmentStrong political commitment

Role of SP during Current Food gPrice “Crisis”

R l d f i i tt ti dR l d f i i tt ti dReal need for increasing attention and Real need for increasing attention and investment in social protection:investment in social protection:

Protective approaches (shortProtective approaches (short--term mitigation)term mitigation)Protective approaches (shortProtective approaches (short term mitigation)term mitigation)Preventative approaches (longPreventative approaches (long--term prevention)term prevention)

In countries with no SP:In countries with no SP:Introduce food or cash transfersIntroduce food or cash transfers

In countries with existing programs:In countries with existing programs:Scale upScale up

Focus on: CCT, pension schemes, employment, Focus on: CCT, pension schemes, employment, microfinancemicrofinancemicrofinancemicrofinanceContinue to invest in human capital creationContinue to invest in human capital creation