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SOCIAL PROTECTION STRATEGY ON SHOCKS : NATURAL DISASTER, ECONOMIC CRISES,

SOCIO-POLITICAL SHOCKS

By Rachel Cipryk (World Bank)

Paula Bertolin (USAID) John Lamm (USAID)

Siebren Wilschut (WFP/Mozambique) Silvia Caruso (WFP/Mozambique)

Ririn Purnamasari (World Bank/Indonesia)

Haryadi Sabar (Indonesia) Riya Farwati (Indonesia)

Protecting Lives, Livelihoods and Development Investments from Shocks

Emergency response currently saves lives, but not livelihoods and development investment Emergency responses can be slow when response

systems are not pre-planned Safety net structures are rarely built to respond to

disasters, but could do so effectively if properly designed

We have invested in SN programs that respond to chronic need and vulnerability - how can we use them to respond

to shocks, too?

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Designing Flexible Safety Nets for Rapid Response o Targeting

• target shock-affected and known vulnerable HHs – integrated registry • scalable – how to include non-core beneficiaries

o Benefits • nature of transfer and level of assistance • rapid delivery – e.g. smart cards, phone credit; using existing systems

o Financing • local, regional, national level contingency budgets

o Administration • agreed-upon protocols for inter-ministerial programs (e.g., MOUs);

coordination between ministries • contingency plans for response through existing mechanisms

o Building resilience of beneficiaries and communities • e.g., nutrition, education, public works for natural resource mgmt.

o Political support • may inform decisions re: which programs are used for response

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Mozambique – Poverty, Vulnerability and Natural Disasters CONTEXT • Total population : 23.2 million

• 54% under poverty line, of which 80% live in rural areas (Household survey 2009). GDP per capita $458 (2010)

• Rural population heavily dependent on agricultural activities highly seasonal and sensitive to climatic shocks

Type of recurrent natural disasters • Major hazards : droughts, floods and cyclones

- 1.3 M people (5% of population) at risk of drought

- 350,000 exposed to floods and cyclones

• Second most likely country to suffer economic hardship due to natural disasters (Maplecroft Natural Disasters Economic Loss Index).

• Floods, cyclones and droughts exacerbate poverty covariate shocks can increase the national poverty rate by 2 percentage points. (WB 2010)

• Climate change, increased exposure to natural disaster risk over the coming 20 years.

Floods & drought , cyclones prone areas

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Non-contributory social assistance managed by Ministry of Women and Social Action: 1. Regular unconditional Cash Transfer to elderly and chronically ill (PSSB): coverage

338,000 households funded with national resources , mainly elderly and disabled unable to work;

2. Temporary support via vouchers/in-kind transfers to poor families affected by idiosyncratic shocks (PASD) 2,200 HHs;

3. Productive Social Action Programme (PASP) Public works “plus” model. New programme being rolled out, government target 440,000 HHs by 2014, for able bodied.

Plus = financial literacy-, live/work skills training, health services etc.

National SP Strategy identifies PASP as a mechanism to address the vulnerabilities associated with climate-related shocks.

Mozambique – Poverty, Vulnerability and Natural Disasters Social Protection Strategy 2012 – 2014

Expenditure on Social Protection 2.8 % of GDP in 2012 , of which: • approx. only 0.7 % are for social assistance broadly defined – majority are non-contributory transfers; figures up to almost 1.8 % when including external funds.

2011 revised SSN programmes approved: efforts to rationalise.

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Design Scalability/flexibility Potential adjustment measures Targeting and eligibility - Geographical (poverty ranking) - CBT - PMT score

PMT time and resource intensive - Allow for CBT only in disasters context Use risk maps to support geographical targeting

Transfer value $22 or equivalent in food for 16 days/work/month

Part-time employment leaves space for reconstruction requirements

Introduction for lump-sum payment as reconstruction incentive

Transfer frequency 4 months rural (lean season)

Does not factor in longer periods if high impact shocks

Allow for flexible periods

Eligible activities public goods based on 30/70 ratio (capital/labor)

High-labour content might be a trade off with assets’ quality

Disaster & livelihood-sensitive menu of activities should be developed

Mozambique – Poverty, Vulnerability and Natural Disasters Disaster Response Readiness of PASP

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Funding Scalability/flexibility Potential adjustment measures Resource availability Funding cap on domestic resources External funding predetermined

National contingency funding available

Contingency funding provision to be activated automatically according to triggers/threshold

Institutional arrangements

Scalability/flexibility Potential adjustment measures

Inter-ministerial SP coordination body

Central level only, chaired by Ministry of Social Action (weak political weight against Disaster Management Office)

Define roles & responsibilities between disaster office and Ministry of Social Action to activate SSN in emergency context

Mozambique – Poverty, Vulnerability and Natural Disasters Administration Scalability/flexibility Potential adjustment measures

Single registry Work in progress

Only effective in districts with ongoing SSN

High-disaster prone districts to be prioritized

Delivery mechanism to be outsourced Private sector

Lack of FSP coverage and services (high unit cost) Disaster Management Office cash-adverse

Contract negotiation to embed flexible service delivery

MIS Work in progress

More comprehensive and coherent Not ready on short notice (by 2014).

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-15

-10

-5

0

5

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15

20

25

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1996 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

GDP growth and Poverty Headcount Indonesia, 1996-2010

Annual Real GDP growth (%)

Poverty headcount ratio at national poverty line (% of population)

Global Financial Crisis

Asian Financial

Crisis

Global Food and Fuel Crisis

Crises and shocks will recur in Indonesia:

Increasingly globalised nature of economy and planned policy shocks.

Indonesia’s location on the highly volatile Pacific Ring of Fire.

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Lessons learned from previous crises ...

Government responses were slow or problematic since a crisis monitoring and response system did not exist yet

While responses ideally optimizing the available programs, they are not necessarily appropriate as crisis response

Five criteria for evaluating the appropriateness of existing programs for shock response 1. Can the response be quickly deployed?

• Nature of program and institutional capacity 2. Can the benefits be delivered to the right households/area ?

• Good targeting system in place 3. Can the response deliver the right amount of support to households during crisis? 4. Can the response be temporary and cost-effective?

• What are the administrative costs as a percentage of total program costs? • Can the benefits be discontinued when shock is over?

5. Will there be political support ?

Assessing Existing SA programs in Indonesia using Five Emergency Response Criteria - at its current state

PROGRAM Quick Response?

Right Benefits? Targeted Well? Cost-effective? Temporary?

Politically Supported?

Raskin (Price subsidy for rice)

YES/NO NO MODERATE NO YES

BLT (UCT) YES YES MODERATE YES NO

PKH (CCT) NO YES MODERATE Not in the long-run.

Long-term program.

Yes.

BSM (Scolarship)

NO NO. MODERATE Not in the long-run.

Long-term program.

Yes.

Pre-determined response protocols

Pre-determined response options

Optimizing the existing instruments and programs Modifying the existing program for crises response:

rapid, effective, temporary Piloting new potential programs, for example Public

Works

– Determining beneficiaries – Determining assistance (the length and level) – Identifying implementing agencies – Budgeting and disbursement

What Indonesia need to do for having an effective respond function

Good Practice Examples

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Design Feature Examples

Targeting Pakistan national registry Crisis modifier clauses Sahel Drought Multi-year Assistance Programs

Benefits Destocking in Pastoral Areas Electronic transfers in Pakistan, Kenya, South Africa

Financing Ethiopia PSNP Indonesia Catastrophe Draw-down Option (CAT-DDO)

Administration USAID Joint Planning Cells (Kenya, Sahel)

Political Support Mozambique PASP USAID Resilience Strategy World Bank Social Protection and Labor Strategy

Resilience Building Ethiopia PSNP Bangladesh CHARS Livelihoods Program Harita rainfall insurance through PW in Ethiopia

Annex I: Resources

• USAID Resiliency Strategy – http://usaid.gov/resilience

• World Bank Social Protection and Labor Strategy • IDS Adaptive Social Protection Project

– http://www.ids.ac.uk/project/adaptive-social-protection

• World Food Program – http://www.wfp.org/content/update-wfps-safety-net-

policy

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