Bangladesh: Improving Coherence Across Social Protection Programs

Iffath SharifSenior EconomistThe World Bank

October 21, 2013

Poverty has declined remarkably in Bangladesh but still affects a significant share of the population …

2000 2005 20100%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50% 49%

40%

32%

13%

9%7%

5%3% 2%

Poverty headcount Poverty gapSeverity

Source: HIES 2000, 2005 & 2010.

Poverty reduced by 1/3 over a 10 year span

From 2000 to 2010, steady decline in poverty ( > 1.7 percentage points per year).

Shocks of 2007-08 did not reverse the gains

47 million people still remain in poverty and 26 million in extreme poverty

Steady GDP growth over the last decade allowed increased expenditures towards social protection

Source: Bangladesh Bureau of Statistics, Ministry of Finance

FY98

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

0

0.5

1

1.5

2

2.5

3

% o

f G

DP

Social Protection expenditure as a percentage of GDP, 1998-2013

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 (p)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

5.9

4.45.3

6.6

5.7

6.7

6.0

2.7

3.7

4.6 4.7 4.8

Annual GDP Growth

GDP Growth GDP growth per capita

Social protection coverage of households doubled within a five year span

Doubling of household coverage of safety nets reflects increased expenditure from 1.6 % to over 2% of GDP (about $3 billion in FY13)

Incremental shift from food-based aid to cash transfers - proportion of beneficiaries who received cash increased from 15% to 60%

Nevertheless food security is a key pillar of social protection policy

Social protection expenditures are quite comprehensive

• Over 22 Ministries implement 95 safety net programs

• Expenditures allocated broadly towards 6 categories: – food security and seasonal

workfare – pension– education stipends and

health services– cash allowances for

vulnerable and special groups – agriculture support programs– labor programs

• Expenditures are skewed towards ten key programs (including pensions) which constitutes over 70% of total Social Protection budget

HEALTH & EDUCATION

AGRICULTURE

PENSION

MICRO CREDIT & EM-PLOYMENT GENERATION

FREEDOM FIGHTERS, DISABLED & VULNER-ABLE GROUPS

OTHERS

CLIMATE CHANGE, EN-VIRONMENT & NATURAL DISASTERS

FOOD SECURITY/VULNERABILITY

• Ineffective targeting mechanisms result in a third of the poor being covered

• Weak administrative capacity and systems introduce inefficiencies and scope for fraud

• Considerable fragmentation among similar programs lead to overlap in the delivery of scarce resources

• Bulk of the resources are still aimed to fight famines and natural disasters (e.g food based programs)

• Yet new challenges include improving nutrition outcomes and providing productive employment to poor youthSource: HIES 2005 and 2010.

Access to SSN by Expenditure Quintile

There is scope however to increase the effectiveness of programs

05

10152025303540

24

16 148

4

3932

2520

10

2005 2010

Performance of all SSNs 2005 2010

Coverage of the poor (%) 20.9 34.4

Leakage (%) 44.3 59.8

Improving the quality of social protection expenditures is a priority for Bangladesh

• Historically Bangladesh has a culture of experimentation and innovation which has resulted in the rich set of programs

• Expenditures however would be more efficient is programs were consolidated and rationalized to address new challenges

• There is willingness to evaluate program effectiveness, confront shortcomings and cancel or modify programs to improve performance

Reform of the Female Secondary School Stipend Program from food to cash based

– Pioneered conditional transfers for education stipends to girls in early 1990s

– Led to four-fold increase in female schooling between 1991-2005, reversing gender gap

– Increased female labor force participation, a critical ingredient for poverty reduction

– Systematic improvements in

implementation, including the introduction of cash transfers; better targeting; stipends to boys

Reform of the Employment Generation Program for the Poorest to focus on effective targeting and improved administration

– A cash based public works program, established in 2008 in response to the 2007-08 global food price crisis

– Adopts a dynamic design and implementation approach, based on field level innovations and learning

– Program managed to increase food consumption and reduce seasonal hunger among poorest

– Received the highest increase in budgetary allocations in two consecutive years, FY 13 and FY14

Looking ahead: towards a more coherentsocial protection system for Bangladesh

• There is increasing recognition of the need to connect the “islands of success” to develop a comprehensive and integrated social protection system

• Recent steps taken by Government include:– A national social protection strategy– A unified targeting system to improve program level coordination– Consolidating the implementation of three of the largest public workfare

programs– Initiating labor market programs to promote overseas migration – Scaling up a conditional cash transfer pilot focused on child nutrition anddevelopment using common administrativeplatforms (beneficiary selection, payments,grievance redress mechanisms, etc.)

World Bank Portfolio• Safety Net Systems for the Poorest Project (SNSP) - $500 million (2014-2017) to support the

implementation of major safety net programs (EGPP, FFW, VGF, TR and GR) and the development of Poverty Database for improved targeting

• Employment Generation Program for the Poorest Project (EGPP) - $150 million (2011-2014) to provide short term employment during lean seasons to vulnerable groups and strengthen program implementation

• Disability and Children at Risk Project (DCAR) - $35 million (2009 - 2014) to expand coverage and quality of social care services for the disabled and children at risk

• Safe Migration for Bangladeshi Workers with support from Japan – $ 2.7 million (2014-2016) grant to provide information and training to potential migrants via community-based organizations to reduce dependence on middlemen

• Shombhob CCT Project – est. $200 million nutrition-sensitive CCT project under preparation following the completion of $2.8 million grant-financed pilot CCT

• Technical Assistance with partial support from DFID/AusAid (2013-2015) – analytical activity to support dialogue on (i) on consolidation of SSNs based on expenditure analysis ; (ii) reform of the Public Food Distribution System, and (iii) labor market interventions needed to respond to the demographic transition and youth employment (e.g. skills for informal sector, overseas migration)

11

World Bank’s Strategic Priorities Improving the quality of social protection expenditures• Targeting, enrollment, payment, and grievance systems • Institutional development for improved governance and accountability• Better coordination/consolidation among services/programs

Fostering the use of IT for transparent delivery of services• Automated Management Information Systems for efficient administration• Formal payment systems, e.g. Post Office cash cards and mobile phones to

reduce transaction costs and scope for leakage

Promoting Evidence Based Policy Making • Analytical studies to inform operations and policy dialogue• Program level impact evaluations to improve safety net design (e.g. EGPP

household surveys; CCT household surveys; DCAR beneficiary surveys)• Analytical studies to understand “graduation mechanisms”: e.g. linking

safety net beneficiaries to more productive employment