Social Safety Nets Expand but Can Do Better at Reaching the Poorest

May 13, 2014

Two-thirds of the world’s poorest people remain uncovered, says WB report

WASHINGTON, May 13, 2014 – Social safety net programs have grown exponentially around the world in recent years, but more than two-thirds of the world’s 1.2 billion poorest people –those living on less than US$1.25 per day—are still not covered, says a new World Bank report.                                                                         

According to The State of Social Safety Nets 2014, more than 1 billion people in 146 low- and middle-income countries benefit from social safety net programs, yet 870 million of the world’s poorest people remain uncovered.

Social safety net programs include cash and in-kind transfers targeted to poor and vulnerable households, with the goal of protecting families from the impact of economic shocks, natural disasters, and other crises; ensuring that children grow up healthy, well-fed, and can stay in school and learn; empowering women and girls; and creating jobs.

On average, developing countries spend 1.6 percent of their GDP on social safety nets. This is low compared to other public policy measures such as fuel subsidies, which do not target the poorest. More can be done to reach the world’s poorest people,” said Arup Banerji, the World Bank’s Director for Social Protection and Labor. There is a strong and growing body of evidence that social safety nets are one of the most cost-effective ways for countries to end extreme poverty and promote shared prosperity.

The report is the first in a series of studies that will monitor and report on the growth and coverage of social safety nets in the developing world, highlight promising innovations, and review important policy and practical developments in this area.

The growth of social safety nets has been bolstered by mounting evidence of their impact on reducing poverty, improving maternal and child health and nutrition, boosting school attendance and learning outcomes, and promoting sustained economic growth. Over the past three years, a total of 53 new impact evaluations on social safety nets have been completed, most of them in Africa. Robust evidence continues to mount on the merits of social safety nets, notes the report.

In terms of global social safety net coverage, the report shows that countries at lower levels of income face the greatest gaps in reaching the poorest people:  

  • In low-income countries, where 47 percent of the population is extremely poor, social safety nets cover less than 10 percent of the population.
  • In lower-middle income countries, social safety nets reach about one-quarter of the extreme poor, but the remaining half a billion of the poorest people remain uncovered.
  • The situation is best in upper-middle income countries, where about 45 percent of the extreme poor are covered by social safety nets.

The report notes that the expansion of social safety net programs, particularly in the form of cash transfers, is particularly evident in Sub-Saharan Africa. For example, 37 African countries currently have unconditional cash transfer programs, almost double the number four years ago. Globally, the number of countries with a conditional cash transfer program increased from 27 countries in 2008 to 52 in 2013. Similar trends are notable for other types of safety net programs such as public works.

Available data on combined spending on social safety nets in low- and middle-income countries amounts to US$337 billion. Despite the positive trend, the report also notes that developing countries’ spending on social safety nets is still disproportionally low.

In the Middle East and North Africa, average expenditures on fuel subsidies are 4 times higher than those for social safety nets. Similar spending patterns are observed in India, Cameroon, Malaysia, Ecuador, Indonesia and Bangladesh.

Three countries –India, China and Brazil—have the largest social safety nets programs in the world, and account for almost half of global coverage. Lower-income countries are learning from their experience,” said Banerji. “This new data shows that, if safety nets are done right, it is possible to close the gap on coverage and reach all of the 1.2 billion people living in extreme poverty across the world.”

The report also notes that countries are moving from fragmented programs to integrated social protection systems. New strategies, better institutional coordination, and innovative administrative tools are emerging worldwide. For instance, the Cadastro social registry in Brazil is helping to collect data on 27 million people  and then linking it to more than 10 social programs, enabling policymakers to see who benefits from which programs and who does not, so they can better target programs to reach the people most in need.

Currently around 68 countries have a national social protection strategy in place that outlines such systemic approaches, up from just 19 in 2009. In addition, 10 countries have now introduced institutional bodies to coordinate social protection programs across sectors and ministries.

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