ASA 1202: UNIT ONE

THE CASE FOR SOCIAL

SAFETY NET PROGRAMMES
 WHAT ARE SOCIAL SAFETY NETS (SSNS)

• Safety nets are;

– formal and informal measures that protect people from
the worst effects of low income and poverty
– non-contributory transfer programs seeking to prevent
the poor or those vulnerable to shocks and poverty
from falling below a certain poverty level.
– Social assistance programmes generally designed to
help individuals or households cope with chronic
poverty or transient declines in income that would
otherwise cause them to sink into poverty or worse
poverty
 THE ROLE OF SOCIAL SAFETY NETS

• traditional role is to distribute income and resources to

the needy in society, helping them to overcome short
term poverty.
• to help households manage risk.
• ROLE 1: INCOME SUPPORT AND POVERTY REDUCTION
• The rationale for income support comes both in equity
and efficiency motives.
• Equity motive: It is often tied to human rights arguments
but can also be addressed in terms of economic gains.
• Efficiency motive: implies market failure i.e there may be
a missing or incomplete market for credit or insurance. It
might also be due to under investing compared to the
optimal for the public good.
ROLE 2: SAFETY NETS ENABLE HOUSEHOLDS TO MAKE
BETTER INVESTMENTS IN THEIR FUTURE
Safety net programs can contribute to capital accumulation
among the poor by;
– preventing the negative outcomes of malnutrition
– Preventing underinvestment in education
– by enabling investment in productive assets.

ROLE 3: SAFETY NETS HELP HOUSEHOLDS MANAGE RISKS

– Reducing the Incidence of Negative Coping Strategies e.g
selling h/hold’s assets, reducing on feeding of children etc…
– Managing Risks Ex Ante e.g planting low-risk, low-return
crops; abstain from investments in fertilizers; diversify
activities rather than specialize in those with highest return;
and keep savings in liquid but low-return forms
ROLE 4: SAFETY NETS HELP GOVERNMENTS MAKE
BENEFICIAL REFORMS.
– Replacing Inefficient Redistributive Elements in Other
Programs
– Facilitating Changes in the Economy Aimed at
Supporting Growth e.g mechanisms to compensate
losers in the process of making reforms
– Fostering More Inclusive Growth i.e by reducing
inequality (political, economic, social)
– Additional Empowerment Effects e.g CCTs & their
contribution towards increasing school enrolment rates
 VISION OF A GOOD SAFETY NET

1. Appropriate i.e Each program should be customised to best fit

with the circumstances through; diagnosis of risk and poverty,
diagnosis of effectiveness and efficiency of individual programs,
proposal reform, rebalance among programs, modify, top or
introduce programs.

2. Adequate i.e Individual programs should provide meaningful

benefits to the subset of the population they are meant to serve.

3. Equitable
• Horizontal equity: treat those who are equal in important
respects. When people are treated equally, you minimise errors
of exclusion.
• Vertical equity: provide those who are poorer more generous
benefits than those who are less poor. i.e minimise errors of
inclusion.
4. Cost effective i.e Ability to build and refine capacity over time.
Contract out to agencies with comparative advantage, where
possible , payment systems should be through banking sector.

5. Incentive compatibility i.e Programmes should not become a

disincentive to work.

6. Program sustainability i.e fiscal sustainability through; Efficient

lower cost programs, Consolidation of piecemeal programs, Funded
by tax rather than debt or donors, Link programs to asset creation.
– political sustainability through designing programs that are
concordant with public attitudes about poverty, establish
record of transparency, effectiveness and impact, program
should consider both demand for inclusion by middle class as
well as demand for fairness (tied to transparency)
– administrative sustainability i.e appropriate set up of
institutional responsibilities and incentives, adequate
administrative budget and capacity development.