INTERNATIONAL FOOD

POLICY RESEARCH INSTITUTE

sustainable solutions for ending hunger and poverty

Social Protection
for Inclusive Growth

Marie Ruel
International Food Policy Research Institute

May 15, 2008

Brussels
 Economic Growth vs. Social
Protection
„ Economic growth alone is not enough to cut
poverty/hunger rapidly and with equity
„ Particularly true where:
¾ High inequality
¾ Bad governance
„ What is needed: Pro-poor growth +
¾ More investment
M i t t in
i social
i l protection
t ti
¾ Implemented earlier
¾ Implemented at larger scale
 What is the Role of Social Protection?
Protective Preventative Promotional Transformational
Secure basic Reduce Enable people to Build, diversify, and Transform
consumption fluctuations in save, invest, and enhance use of institutions and
consumption accumulate assets relationships
and avert through • Reduce access • Economic
asset reduction in risk constraints • Political
reduction and income • Directly provide or
• Social
variation
i ti loan assets
• Build linkages with
institutions

• Public
P bli works
k
•Food or cash • Insurance (health, asset)
transfers
• Direct feeding Conditional cash • Livelihoods programs
• Subsidies transfers • Credit and savings
• Home-based care
for the ill • Maternal and Child Health and Nutrition
• Child and adult education/skills
• Early childhood development
 Social Protection & the Life Cycle
Pension
Elderly

Public Works
Adults Income generation

School fee waivers & vouchers

SP
School age Food/Cash for schooling
Programs
& Policies
Early Childhood Development
Pre-school

Matl & Child Health & Nutrition

0-2 y old

Food Cash Transfers

Food,
Prenatal
Conditional Cash Transfer Programs
g
(CCTs)

„ Target cash transfers to poor households,

often
f to woman within
i hi HH
„ Conditional on:
¾ Enrolling children in school
¾ Attendingg health services
„ Some also fund supply side strengthening
 Examples of Programs

„ Progresa/Oportunidades (Mexico)
„ Bolsa Alimentação (Brazil)
„ PRAF (Honduras)
„ R dd
Red de PProtecci
Protecció
t ión Social
ió S i l (Nicaragua)
(Ni )
„ Familias en Acció
Acción (Colombia)
„ Red Solidaria (El Salvador)
„ Bono Solidario (Equator)
„ Turkey
Mexico (PROGRESA/Oportunidades)

„ As of 2004, 5 million families, 25 million

individuals
¾ Budget of US$ 2.5 billion or 0.3% of GDP

„ Average benefit received by beneficiary

households: 20% of the value of
consumption expenditure before program
 Impacts on Poverty Reduction

„ In Mexico, PROGRESA reduced:

¾ Poverty
y byy 8.2%
¾ Poverty gap by 23.6%

¾ Se
Severity
e ty of
o poverty
po e ty by 3
34.5%.
5%

„ In Nicaragua, the Red increased:

¾ Average per capita expenditures by 18% and

¾ Average per capita expenditures of the

poorest households by 30%
 Impacts on Education (Enrollment)

30
ollment

25
points)

20
0
nge in enro
ercentage p

Primary School
15
Secondary School
10
Chan
(pe

ey
rls

ua
ys

as

h
di

s
bo

rk
r

de
gi

ag

bo
du

Tu
la
ar
co

m
on

ng
ic

ic
i

Ca
ex

H
ex

Ba
M

(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
p on Health and Nutrition

70

60
nge (percentage

50
Honduras
40
points

Mexico
30 Nicaragua
Colombia
20
Chan

10

-10

-20
Health visits Illness Growth monitoring Stunting

(Sources: Skoufias 2005; Gertler 2000; Hoddinott forthcoming; IFPRI 2003; Maluccio and Flores
2005)
 C
Conclusions
l i on CCTs
CCT

„ Programs have played important role in:

¾ Reducing poverty, improving quality of diets
¾ Improving health and education outcomes

¾ Empowering women

¾ Human capital formation

„ Effectiveness depends on:

¾ Design, implementation, supply side response
¾ Contextual factors (institutional, political,
sociocultural
i l l
 Social Safety Nets
C P
Can Promotet G
Growthth
 1) Creating Assets

„ Conditional Cash Transfers: human assets

¾ By promoting schooling and health of children
„ Public Works: physical assets
¾ By improving infrastructure (e.g. roads, irrigation,
schools,
schools health clinics,
clinics etc
etc.))
„ Private Savings: financial assets
¾ E M
E.g. Mexico:
i llow iincome HH use 10% off ttransfers
f
for small investments, which leads to sustained ↑ in
consumption/capita in following 5 years
¾ E.g. Bangladesh: compulsory savings imbedded in
program
 2) Protecting Assets

„ P
Preventt loss
l off assets
t following
f ll i shocks
h k
(floods, drought, civil strife):
¾ Shocks can directly destroy assets (e
(e.g.
g loss of
livestock)
¾ Shocks mayy lead to asset sales to smooth
consumption
¾ Income shocks can lead to lower investment in
schooling or health of children
children, with
ith long
long--lasting
consequences
E g drought in Zimbabwe led to childhood
E.g.
stunting and reduced schooling
(impact:14% loss of lifetime earnings)
 3)) Allowing
g more effective use of
resources + risk taking

„ Threat of shocks leads to:

¾ Low
o risk
s livelihood
e ood strategies
st ateg es
¾ Avoidance of new technologies or credit
¾ Resulting in lower productivity (e.g.
(e g India and
Tanzania, this ↓ farm profits by 25-
25-50%)
„ SSN act as form of insurance:
¾ Motivates poor HH to take risks
¾ Allows
Allo s q
quicker
icker reco
recovery
er from shocks
¾ Reduces permanent consequences
 4)) Facilitating
g structural policy
y
reforms
„ Economic reforms that promote overall growth
often incur costs of adjustment for some
population segments
„ Safety nets can promote political acceptance of
new p
policies by
y offsetting
g some of these costs
(compensation)

E.g. Mexico introduced transfers to small

farms when adopting freer trade. The
program also
l led
l d to
t increased
i d production
d ti by
b
serving as a source of cash for inputs and
as a form of insurance
 5) Reducing Inequality

„ Effective targeting helps get the transfers to

the poor:
¾ Community targeting
¾ Household targeting using income proxies or other
targeting approaches

This helps reduce inequality. By reducing

inequality
y social protection policies can
create conditions for growth to occur
 K IIssues iin Program
Key P Choice
Ch i

„ Levels of specific human capital disadvantage

„ Desired outcomes, where, for whom?
„ Reasons for these deficiencies
„ Administrative capacities
„ Capacity of supply side to deliver with quality
„ Capacity to monitor compliance
„ Costs and resources available over time
„ Political support
pp
 C
Conclusions
l i

„ SPP can improve

i livelihoods
li lih d off the
th poor, allow
ll
their productive participation in economy
„ Other components of development strategies:
good governance, functional infrastructure,
schools & health, etc.
„ Effective SSN programs have:
¾ Clear objective and sound design
¾ Feasible and effective targeting mechanism
¾ Effective and reliable implementation
¾ Strong M&E
¾ Transparency in operations
operations, good communication
¾ Strong political commitment
 Role of SP during
g Current Food
Price “Crisis”
„ R l need
Real d ffor iincreasing
i attention
tt ti and
d
investment in social protection:
¾ Protective approaches (short-
(short-term mitigation)
¾ Preventative approaches (long-
(long-term prevention)
„ In countries with no SP:
¾ Introduce food or cash transfers
„ In countries with existing programs:
¾ Scale up
„ Focus on: CCT, pension schemes, employment,
microfinance
„ Continue to invest in human capital creation