Social Assistance in sub-Saharan Africa

Will the green shoots blossom?

Miguel Niño-Zarazúa, UNU-WIDER

 Background
• Rise of social protection in the global South – A shift in policy thinking that
reflects an emerging consensus that eradicating poverty requires economic
growth, basic service provision and social protection

• Forms of social protection in the global South

1) Social Insurance (contributory health, unemployment and pension systems)

2) Labour market regulations (minimum employment standards and worker

rights, including child protection

3) Social Assistance (income transfers to address poverty and vulnerability)

 Cumulative
Cumulative flagship transfer
flagship social programme
assistancestarts by type
programmes by type
180

160

140

120
Number of P rogrammes

100

80

60

40

20

0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

In Kind HD-CCT Employment Categorical--‐pension Categorical--‐Other

 Background
• The ‘green shoots’ of social protection in sub-Saharan Africa are mainly in the
area of Social Assistance
• Social Assistance has become a component of a second-generation of Poverty
Reduction Strategy Papers in sub-Saharan Africa. There are now National Social
Protection Strategies in Ghana, Mozambique, Rwanda and Uganda
• Livingstone Process – through the African Union– agreed to push the SP agenda
to replace emergency aid with regular and reliable income support
• Social Assistance is also increasingly seen as a policy response to shocks i.e. food
and financial crises
– Borrowing from experiences in Latin America
 A typology for social assistance in SSA
1. Pure income transfers
1.1 Child and family allowances: ZA Child Support Grant
1.2 Old-age and disability pensions : ZA’s Old-age pension, Mozambique’s Programa de Subsidio de
Alimentos
2. Income transfers plus (transfers linked with utilisation and provision of basic services)
2.1 Transfers for human development: Ghana’s Livelihood Empowerment Against Poverty (LEAP); Tanzania’s
Pilot Cash Transfer Programme; Kenya’s CT-OVC
2.2 Employment guarantee schemes/Public Works: Malawi’s Improving Livelihood through Public Works;
ZA’ Expanded Public Works Programme
2.3 Asset protection and asset accumulation: Ethiopia’s Productive Safety Net Program
Largest social transfers in sub-Saharan Africa
Programme Country Beneficiaries Income Group
(in millions)
Old Age Pension South Africa 10 Upper middle income
Child Support Grant South Africa 9.5 Upper middle income
Productive Safety Net Program Ethiopia 8.2 Low income
Expanded Public Works Programme: South Africa 5 Upper middle income
Phase 2
Improving Livelihood Through Public Malawi 2.7 Low income
Works Programme
Disability grant South Africa 1.5 Upper middle income
Protracted Relief Programme Zimbabwe 1.5 Low income
Food Subsidy Programme Mozambique 0.7 Low income
Old Age Grant Namibia 0.65 Upper middle income
Old Age Pension Botswana 0.60 Upper middle income
Sub-total 40.3
Other 32 pilots 3
TOTAL sub-Saharan Africa 43
Source: Barrientos and Niño-Zarazúa (2011)
 Origins of social assistance in SSA
• Non-contributory pensions for poor whites in South Africa – borrowed from early origins of
European Welfare systems in the 1920s –Apartheid wouldn’t allow ‘white poverty’

• Donor-supported responses, usually food aid against famine and food insecurity
 Since the 1980s, Angola, DRC, Ethiopia, Liberia, Mozambique, Rwanda, Sierra Leone, Somalia,
Sudan and Uganda faced humanitarian crises

• Indigenous forms of protection –community and household level safety-nets that although
imperfect, continue to evolve:
 Informal (and formal) savings – more effective for small-losses/high frequency contingencies
 Insurance schemes - more effective for large-losses/low-frequency contingencies
 Before mid-1990s
Pure income transfers
Old age and disability grants
in South Africa, Mauritius,
Namibia, Seychelles
Categorical universal
MIC Africa ’
transfers, means tested in
model’ age-
South Africa;
based
Racially segregated in
vulnerability
eligibility and benefits
transfers
Politics: Domestically driven
by settler elites
Finance : tax financed
Few countries with public
welfare programs (Zambia,
Zimbabwe)
LIC Africa’ …but emergency food aid
model’ dominant
Shift from food
Extreme
poverty- Politics: food aid externally
based driven, but exploited by local
transfers political elites
Finance: donor financed
After mid-1990s
Dynamics Pure income transfers
Removal of racial
discrimination;
Adoption of social pensions
in Botswana, Lesotho, and
Swaziland; 1998 CSG in ZA
Extension of
coverage Politics: Equity politics in
ZA and Namibia; electoral
politics in Lesotho;
Sub-regional ‘demonstration
effect’
Finance : tax financed
Mozambique FSP
Zambia pilot categorical
transfer programs
Politics: donor driven
aid to social
Finance: donor financed in
transfers
Zambia; joint donor-
government financed in
Mozambique
Income transfers plus
services
Experiments with
income transfer plus
services – Zibambele
and Gundo Lashu in
South Africa
Ethiopia PNSP;
Kenya OVC;
Malawi’s Mchinji;
Ghana’s LEAP
Politics: donor driven,
but rising government
engagement
Finance: largely donor
financed but
domestically financed in
Ghana
 The MIC Model
• HIV/AIDS has impacted household composition in Southern Africa – family structures,
functions and relationships have enhanced the effectiveness of old age pensions
 The Old Age Pension  Child Support Grant = effective policy responses
 In Southern Africa, old age grants are in practice income transfers to poor households with
older people
Country Age of Selection criteria Monthly Income % of targeted Cost as % of
eligibility Transfer population with GDP
(in US$) pension
Botswana 65+ age and means 27 85 0.4
test
Lesotho 70+ age and 21 53 1.4
citizenship
Namibia 60+ age and 28 87 2
citizenship
South Africa 63+ men age and means 109 60 1.4
60+ women test
Swaziland 60+ citizenship and 14 80 n.a
means test
 The LIC Model
• Economic growth in 2000s, debt relief, revenues from natural resources, and changing
donor priorities, have produced a shift in policy from emergency aid to social assistance.
There are two separate shifts:

1. From emergency food-aid to income-aid in the context of humanitarian emergencies

2. From emergency food aid (whether it is in food, in-kind, or in-cash) to regular and
reliable social transfers- e.g. Ethiopia's PSNP

• Programmes largely financed by donors which dominate programme design

• Most schemes are pilots and lack the institutional, financial and political support. There are
a few exceptions: Ethiopia’s PSNP . It covers 8.2 million people -11% of Ethiopia’s
population. Cash for work (80% budget) AND direct support for vulnerable groups (20%
of recipients)
 The LIC Model
• The likely evolution of the LIC model is hard to predict

• Existing programmes have developed some momentum, but donor

involvement has often not contributed to making them central to the
priorities of political elites

• Key determinants for the future dynamics of the LIC (and MIC) model of
social assistance:

1. Financing
2. Institutional capacity
3. Politics and political economy considerations
 Financing
• Simulations suggest that 1% of GDP could be sufficient to cover a basic pension, 2% of GDP a
child focused transfer, and 0.6% of GDP could finance an unemployment insurance – a
transfer package would cost 3-6% of GDP

• If programmes were targeted, the cost would be lower

• However, even if a transfer package of poverty-targeted programmes was adopted, it would

still represent between 18-40% of government revenues

• For most LIC countries, it would be hard to adopt social assistance programmes to scale,
particularly when the room for redistribution is limited and the tax collection capacity is
inadequate
– This explains resistance from finance ministers often concerned about the sustainability of social assistance
 Financing
• Tax revenues as a share of GDP have grown modestly in the sub-Saharan region;
from 13.5% in the 1980s to 18% in the 2000s

• Constraints are associated with:

 The structure of the economy – the rural subsistence economy and the informal
sector are difficult to tax
 Administrative capacity of revenue authorities
 Political economy factors (opportunistic incumbents avoid raising income tax)

• What are the options available for LICs to finance social assistance?
 What about redistribution?

• Redistribution policies have been important for the financial mix of social
protection in industrialised countries. In SSA, however, redistribution policies
remain very limited:

• The marginal tax rate (MRT) on the ‘rich’ that would be necessary to
eliminate the normalised aggregate poverty gap in SSA would be simply
economically and politically prohibitive as it would exceed 100% in most
countries

– MTR: proportion of tax paid for each additional income unit earned at the highest
income threshold
 What about redistribution?
Zambia
Uganda
Swaziland
Sierra Leone
Senegal
Rwanda
Nigeria
Niger
Mali
Malawi
Lesotho
Guinea-Bissau
Guinea
Ghana
Gambia
Ethiopia
Central African Republic
Burkina Faso
Cameroon
Tanzania
Burundi
Mozambique
Madagascar
Cote d'Ivoire
Botswana
South Africa

0 10 20 30 40 50 60 70 80 90 100

Niño-Zarazúa et al (2012)
 What about resource mobilisation?
1. Revenues from natural resources: the discovery and exploitation of natural resources (including oil) in many
countries in SSA have created, ‘in principle’, the conditions to support Social Assistance :
– Angola, Botswana, Cameroon, Chad, Côte d'Ivoire, Gabon, Equatorial Guinea, Ghana, Namibia, Nigeria, Republic of Congo,
Sierra Leone, Togo, Uganda and Zambia

– Sovereign Wealth Funds introduced in Nigeria, Botswana and Angola

• Risks: opportunistic incumbents in non-competitive political systems have little incentives to reform tax regimes

2. Shifting expenditure –tax exemptions/subsidies on foodstuff, and fuel show large leakages to the non-poor while
diminishing the tax base

• Risks: the greater the number of losers from policy change, and the more up front they are, the more difficult it will
be to shift public expenditure (e.g. the failing attempt to remove the fuel subsidy in Nigeria in 2012)

3. Medium-term fiscal policy objectives

– Rises in VAT earmarked for expenditures on Social Assistance (on e.g. sin products)
– Anti tax-evasion policies (Chile was able to reduce VAT evasion from 20% in the 1990s to less than 10% in 2009)
 Institutional capacity
• Limitations in capacity to formulate, deliver, and evaluate transfer programmes are a
key constraint for the LIC model

• Strong reliance on community management and a mix of providers. Malawi,

Ethiopia and Zambia rely on community organizations to select beneficiaries, collect
and distribute benefits, and review and manage eligibility

• Advantages: Local elites and resources are engaged in poverty reduction efforts
• Disadvantages: Community involvement tends to reproduce and/or reinforce social
disparities and power relations. Community engagement is restricted to delivering
programmes that are fixed in all key parameters
 Institutional capacity
• In MICs, partnerships with private sector providers have facilitated the
expansion and progressive reach of poor households in remote rural
areas
– In Namibia and South Africa, the management of the transfers is under the
government control, but the delivery of grants has been increasingly taken over
by private providers. In Swaziland, financial institutions have been involved in the
delivery of the old-age grant

• Key challenge: to improve access and quality of basic service provision

together with social assistance
Political economy considerations
Democratic transitions
and economic growth (and
better fiscal space) have
created favourable
conditions to introduce and
expand Social Assistance

Research has also

generated knowledge
about what works in
antipoverty policy –donors’
evidence based agenda
 Political economy considerations
• What does the emergence of social assistance mean for welfare institutions in
SSA?

• In LICs, where welfare institutions are absent, social assistance might lead to new
state institutions aimed at addressing poverty

• In MICs, with existing social security institutions, social assistance has led to
parallel institutions

– Contributory vs. non-contributory (based on the principle of citizenship)

– Life-course protection vs. basic protection
– Insurance against contingencies vs. investment against structural poverty
 Political economy considerations
• What are the implications for economic and social development of these transitions? What
can theory (and history) predict for the future development of welfare institutions in SSA?

• What role do (and will) elites, political parties and self-interest taxpayers (a raising middle
class) play in the expansion of social assistance in SSA?
– Possibly contingent on externalities (e.g. reduction in social unrest, crime) and incentives

• Will social assistance become state policy priority under imperfect competitive political
systems in SSA? What can we expect from opportunistic incumbents?

• Will donor support translate into institutionalisation of social assistance or simply peter out
and be quietly forgotten when donors move to the next new game in town?
 Addressing the big questions
• UNU-WIDER has initiated a new research project, ‘The Economics and
Politics of Taxation and Social Protection’, that aims to shed light on
the system-wide impacts of social protection and tax systems in
developing countries
• It will provide researchers and policy-makers with tools to improve the
methods of analysis of current incidence of tax and social protection
systems, and the potential distributional impacts of tax and benefit
reforms
• It will explore microsimulation analysis, register-based tax research,
and political economy models of taxation and social protection
 Social Assistance, Politics and
Institutions (SAPI) database
• As part this project, UNU-WIDER is currently developing a new database, ‘Social
Assistance, Politics and Institutions’ (SAPI) database

• The SAPI will provide a synthesis of longitudinal and cross-country comparable

information on:
i. Social Assistance programmes in developing countries

ii. Country-level information on economic and social performance

iii. Political economy dimensions

 Why is the SAPI important?
• There is a growing recognition about the importance of learning from,
and better understand, the wide range of programme characteristics in
terms of objectives, design features, reach and poverty effectiveness
• There are positive externalities from cross-country knowledge sharing.
The fact that the experiences from one country can help others avoid
placing resources on ineffective policies, underlies the critical role of
documenting and making information on social assistance programmes
widely available
The SAPI aims to achieve that goal
 Content of the SAPI
The SAPI will collect longitudinal annual data, starting from the 1990s, on the following dimensions:
• Programme type (e.g. CCT, old age pension, child allowance, workfare programmes, etc.)
• Programme design (scale, objectives, reach)
• Transfer design (amount, means of receipt, frequency, conditions)
• Programme budget and cost
• Programme implementation (centralisation, local discretion, horizontal or vertical coordination,
government / agency / community / NGOs involvement
• Legal framework
• M&E Indicators and programme outcomes (on poverty reduction, human capital, asset accumulation,
employment, etc.)
• Country level information (poverty, inequality, demographics, labour markets, macro indicators)
• Political Economy dimensions (political regimes, quality of government and institutions, crime, violence
and conflict, etc.)
 Concluding remarks
• The green shoots of social assistance are sprouting – with MIC and LIC
varieties
• Concerns about whether the challenges can be met – domestic politics,
political economic considerations, financing and institutional capacity
• Possible ways of overcoming the challenges are emerging – south-south
regional processes of diffusion and learning (e.g. the Brazil-Africa Alliance),
improved tax effort, and the gradual and hard work of institutional
development
• Foreign aid and foreign ideas (and solidarity) can help, but donors need to
make sure they do not try to control policy initiatives – only Africans can
make social assistance programmes (and systems) work for Africa
www.wider.unu.edu
Helsinki, Finland