INTERNATIONAL FOODPOLICY RESEARCH INSTITUTEsustainable solutions for ending hunger and poverty

Social Safety Nets and Social Protection:

An international Perspective

Marie Ruel,Director, Poverty, Health and Nutrition Division

International Food Policy Research Institute

June 2, 2010 Brasilia

Why Social Protection?

Economic growth alone is not enough to cut poverty/hunger rapidly and with equity

Particularly true where: High inequality Bad governance

What is needed: Pro-poor growth + More investment in social protection Implemented earlier Implemented at larger scale

Overview

What is the role of social protection? What are the lessons learned from international

experience with conditional cash transfer (CCT) programs?

What is the evidence for growth enhancing effects of social safety nets?

What is Social Protection?

Secure basic consumption

Reduce fluctuations in consumption and avert asset reduction

Enable people to save, invest, and accumulate throughreduction in risk and income variation

Build, diversify, and enhance use of assets• Reduce access

constraints• Directly provide

or loan assets

• Build linkages with institutions

•Direct feeding•Subsidies

•Public works•Insurance (health,

asset)•Livelihoods programs•Credit and savings

•Maternal and Child Health and Nutrition•Child and adult

education/skills•Early childhood development

• Home-based care for the ill

Transform institutions and relationships• Economic• Political• Social

Protective Preventative Promotional Transformational

Conditional cash transfers

• Food or cash transfers

Adato & Hoddinott 2008

Social Protection & the Life Cycle

Pension

Public WorksIncome generation

School fee waivers & vouchersFood/Cash for schooling

Early Childhood Development

Matl & Child Health & Nutrition

Food, Cash Transfers

Elderly

Adults

School age

Pre-school

0-2 y old

Prenatal

SPPrograms& Policies

Conditional Cash Transfer Programs (CCTs)

Target cash transfers to poor households, often to woman within HH

Conditional on: Enrolling children in school Attending health & nutrition services

Some also fund supply side strengthening

Popular Policy Instrument

NY and DC

Examples from LA

Country % total population

% extreme poor

% GDP % social spending

Brazil (06) 22.7 >100 0.43 2.0

Mexico (06) 23.8 >100 0.44 4.3

Guatemala (08)

13.6 46.7 0.06 0.8

Honduras (06)

6.8 14.9 0.02 0.2

Nicaragua (06)

2.5 7.8 0.04 0.4

Brazil: 11 million households (46 million people)Mexico: 5 million households (25 million people)

What is so special about CCTs?

Attractive design (health-nutrition-education; and short+ long-term benefits)

Targeted, gender sensitive, participatory, multi-sectoral

They work: impacts on wide range of outcomes

Have been scaled up successfully

Impacts on Poverty Reduction

In Brazil, BF reduced: Poverty: 12%; severe poverty: 19% Inequality: 21% of the 4.7% ↓ in Gini index

(1995-2004)

In Mexico, PROGRESA reduced: Poverty: 8.2%; severe poverty: 34.5% Inequality: 21% of the 5% ↓ in Gini index

(Source: Soares et al. 2006-07)

Impacts on Education (Enrollment)

(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)

0

5

10

15

20

25

30

Change in e

nro

llm

ent

(perc

enta

ge p

oin

ts)

Primary School

Impacts on Health and Nutrition

(Sources: Skoufias 2005; Gertler 2000; Hoddinott forthcoming; IFPRI 2003; Maluccio

and Flores 2005)

-20

-10

0

10

20

30

40

50

60

70

Health visits Illness Growth monitoring Stunting

Ch

an

ge (

perc

en

tag

e

poin

ts Honduras

Mexico

Nicaragua

Colombia

Evidence of negative effects?

Labor force participation: No effect (Nicaragua, Mexico, Ecuador, Cambodia)

Positive effects in Brazil (4.3 pp in women)

Positive effects on reducing child labor Crowding out private transfers:

South Africa and Philippines (pension scheme ↓ children transfers)

No effect in China, Vietnam, Indonesia, Honduras, Nicaragua

Fertility: Mexico: no effect

The Verdict

CCTs have played important role in: Reducing poverty, inequality, food security Improving use of health, education services Empowering women

Much smaller impact on outcomes (school achievement, health, nutrition)

Effectiveness depends on: Design, implementation, supply side

response Contextual factors (institutional, political,

sociocultural, inter-sectoral coordination)

Social Safety Nets: Evidence of Growth Promoting Effects?

1) Creating Assets

Human assets E.g. Conditional Cash Transfers (promoting

education, health, nutrition of children) Physical assets:

E.g. Public Works in Asia ( improving infrastructure (e.g. roads, irrigation, schools, health clinics)

Financial assets: E.g. Bangladesh: compulsory savings imbedded in

transfer program E.g. Mexico: low income HH use 10% of transfers

for small investments

2) Protecting Assets

SSN can protect loss of assets following shocks (floods, drought, civil strife): Destroy assets (e.g. loss of livestock) Lead to asset sales Lead to lower investment in human capital

E.g. drought in Zimbabwe led to childhood stunting and reduced schooling

(impact:14% loss of lifetime earnings)

3) Allowing more effective use of resources + risk taking

Threat of shocks reduces risk-taking, innovation: E.g. India, Tanzania: risk aversion reduced

farm profits by 25-50%

SSN act as form of insurance: Motivates poor HH to take risks

Allows quicker recovery from shocks

Reduces permanent consequences

4) Facilitating structural policy reforms

Economic reforms that promote overall growth often incur costs of adjustment for some population segments

SSN nets can promote political acceptance of new policies by offsetting some of these costs (compensation)

E.g. Mexico introduced transfers to small farms when adopting freer trade (providing

cash for inputs and a form of insurance)

5) Reducing Inequality

Effective targeting helps get the transfers to the poor: Community targeting

Household targeting using income proxies or other targeting approaches

By reducing inequality, SSN can create conditions for growth to occur

What have we learned?

Major paradigm shift in past 10-20 years– Brazil leading the way: Economic growth alone cannot generate

sustainable poverty reduction SPP can improve livelihoods of the poor, lead to

asset building, savings and participation in economy Innovation in design, targeting, implementation

of SSN – new generation of programs Critical learning from rigorous evaluations

Still a lot to do

Careful selection of programs based on: Nature, severity of problem, context Capacity (administrative, operational); supply side Financial resources Ability and incentives for multi-sectoral work Political support

Need to improve on outcomes Need exit strategy – programs not made to be

permanent (Levy: if permanent you have failed) Need to analyze & evaluate social strategies