Social Safety Nets Expand in Developing Countries, But Majority of the Poorest Still Lack Coverage

July 7, 2015

Safety net programs must be more efficient and effective to close the coverage gap: WB report

WASHINGTON, July 7, 2015 – A growing number of developing countries are investing in social safety nets to improve the lives and livelihoods of billions of poor and vulnerable people, yet around 55 percent of the world’s poor or 773 million people with acute needs still lack safety net coverage —especially in lower-income countries and in urban areas—and countries must take action to close this coverage gap, says a new World Bank Group report.

According to The State of Social Safety Nets 2015, more than 1.9 billion people in 136 low- and middle-income countries are now on beneficiary rolls of social safety net programs. In Africa alone, the number of countries setting up social safety net programs has doubled over the past three years, as evidenced by rigorous evaluations that prove these programs work. But three quarters of the poorest people in low- and lower-middle income countries, and more than one-third of the poorest people in middle-income countries, lack safety net coverage and remain at risk.

The report follows the recent joint statement by the heads of the World Bank Group and the International Labor Organization (ILO), endorsing the goal of universal access to social protection –including safety nets— by 2030. The Third Financing for Development Conference in Addis Ababa next week is an opportunity to ensure that the international community has the means to make this vision a reality.

 “The World Bank Group and the ILO share a vision of social protection for all, a world where anyone who needs social protection can access it at any time,” said Jim Yong Kim, World Bank Group President and Guy Ryder, Executive Director, ILO, in their joint statement. “The new development agenda that is being defined by the world community – the sustainable development goals (SDGs) – provides an unparalleled opportunity for our two institutions to join forces to make universal social protection a reality, for everyone, everywhere.”

These 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.

The report is the second in a series of studies that 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 report could also serve as a tool to monitor progress in achieving goal 1.3 of the SDGs to implement nationally appropriate social protection systems and measures for all by 2030.

More countries at all income levels are investing in social safety net programs because they are transformational. There is strong body of evidence that these programs ensure poor families can invest in the health and education of their children, improve their productivity, and cope with shocks,” said Arup Banerji, the World Bank Group’s Senior Director for Social Protection and Labor. Going forward, more can be done to close the coverage gap and reach the world’s poorest by improving the effectiveness of these programs underpinned by enhanced targeting, improved policy coherence, better administrative integration, and application of technologies.”

According to the report, the combined spending on social safety nets in 120 developing countries amounted to about US$329 billion between 2010 and 2014. Well-designed programs are cost-effective, costing countries only between 1.5 percent and 1.9 percent of GDP –far less than most government spending on fuel subsidies.

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:

  • The world’s five largest social safety net programs are all in middle-income countries (China, India, South Africa and Ethiopia) and reach over 526 million people.
  • In low-income and lower-middle-income countries, social safety nets cover only 25 percent of the extreme poor, compared to 64 percent in upper-middle-income countries.
  • In Sub-Saharan Africa and South Asia, where most of the global poor live, social safety nets cover just one-tenth and one-fifth of the poorest 20 percent of the population, respectively.
  • Coverage of the poorest in urban areas, where an estimated 863 million people live in precarious settlements, also remains a challenge. Poverty is urbanizing at a rapid pace.

Conditional cash transfer programs account for over 50 percent of the beneficiaries in social safety net programs, and are now present in 64 countries, a dramatic increase from 2 countries in 1997. These programs have major positive spillover effects on the local economy of target communities. Recent evidence shows that these programs have a nominal income multiplier ranging from US$1.34 to $2.52 for each $1.00 transferred.

School feeding and fee waivers cover around 600 million people, or almost one-third of safety net beneficiaries. Unconditional cash transfers and conditional cash transfer programs, including public works, reach 718 million people or 36 percent of global social safety net beneficiaries.

However, the report argues that while the targeting of social safety nets is generally pro-poor, there is significant room for improvement. Conditional cash transfers are the best targeted safety net programs, devoting as much as 50 percent of benefits to the poorest 20 percent of the population. This is evident in the case of large-scale conditional cash transfer programs in Latin America (such as Bolsa Familia in Brazil and Prospera in Mexico) and more recently established programs in Asia (such as the Pantawid in the Philippines). On the other hand, social pensions and unconditional cash transfers are less well targeted to the poor.

The report also highlights the need to improve the efficiency of social safety net programs by strengthening countries’ capacity to target, integrate, administer, and evaluate social protection programs, such as social and beneficiary registries.  


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