15-16 JUNE 2016 / Tour & Taxis / Brussels

Social protection for inclusive growth

<p>Social protection has emerged as a key development priority and an important target for ending poverty. It has gained particular momentum following the recent global financial and food crises, as well as the growing awareness of poor people’s vulnerability to climate-related disasters. Interest in social protection continues to expand as policymakers strive to secure hard-earned human development gains and tackle increasing levels of inequality, which often threatens social and political stability. However, the discussion has focused less on how social protection can be best conceptualised and implemented in a decentralised context, specifically by local governments. Electronic transfers to people in rural areas used to be unthinkable due to the non-presence of banks, challenges with electricity and difficult accessibility. Whilst these latest developments have created interesting opportunities for social transfer beneficiaries, financial inclusion is still not a reality in many countries.</p>
Auditorium C
Session type: 
Wednesday, November 27, 2013 -
11:30 to 13:00
Key Points: 
  • Social protection is increasingly viewed as a component of development.
  • Only about 20 % of people are covered by social protection measures. Coverage should be extended to all poor people.
  • By using electronic transfers instead of paper vouchers or cheques, governments can promote financial inclusion.
  • When poor people open bank accounts and learn how to use them, they are more likely to save.
  • Social protection needs to be on the agenda of the debate about the post-2015 Sustainable Development Goals.



Social protection programmes are increasingly considered part of the anti-poverty and development policy mix. Traditionally, benefits have been targeted at certain categories, for example seniors or single women. The old approach led to leakage, with benefits sometimes going to non-poor individuals, while ignoring larges swathes of the needy. In many countries, social protection has been limited to pensions.

Only about 20 % of the world’s working age population is covered by social protection schemes. Coverage should be extended to all poor people, and these programmes should give the poor a way to combat growing inequality. They can offer a weapon against social exclusion, bringing people into, or back into, the mainstream of society. They can be used as a shield against economic crises, but should also provide a ladder that people can use to climb up to a better quality of life.

There are three major trends playing out today:

  • Inclusive growth – although many economies are growing, the distribution of its benefits is increasingly unequal. Cash transfers and social programmes can decrease inequality and generate demand from otherwise marginalised consumers.
  • Internationalisation – until recently social protection was viewed as an exclusively national issue.
  • Delivery mechanisms – mobile banking and other means of electronic payments lead to more convenience, for example no need for trips to the post office or social welfare outpost to pick up a cheque. This also provides access to the financial system to people who have been largely excluded from it.

Adopting electronic transfers for social protection payments can slash administrative costs, reduce fiduciary risk, cut fraud, and ensure that the right person gets paid – and on time. They give recipients access to the financial system, including services such as savings accounts and credit. When Fiji moved to making electronic payments, people started saving more. Governments that want to follow Fiji’s example need to be prepared to encourage their citizens to save and they need to provide basic financial literacy training, for example on how to use an automated teller machine or how to create and use a PIN number.

While national standards are fundamental, local governments are well placed to implement and monitor programmes. Nepal discovered this in a pilot programme to build a more efficient and inclusive safety net. Launched in a single district, it is being prepared for rollout elsewhere.

Given the greater emphasis on the role of social protection programmes in development, the issue has become part of the debate about the post-2015 Sustainable Development Goals (SDGs). A number of principles should guide that debate:

  • Human rights at the forefront;
  • Empowerment of women and girls – emphasis on equal opportunity and health, including reproductive education;
  • The battle against inequality;
  • Standards for social protection programmes should be established for both the private and public sectors; and
  • Funding must be efficient, ambitious and transparent.

Grant programmes need to be accompanied by supply side upgrades. For example, education scholarships are only as good as the schools where they are used.

  • Body: If we knew how to target the extreme poor, if there was no leakage and if you define poverty as living below USD 1.25 a day […] then with the fiscal revenue from resource sales, these countries could end extreme poverty overnight.
    Quote Year: 2013
    Nid: 1598
  • Body: Financial literacy training is important. We often presume people know how to open a bank account but more often than not, they don't. People need to know about the benefits of having a bank account, how to use ATMs, what a PIN number is and how to use a debit card.
    Quote Year: 2013
    Nid: 1595
  • Body: Governments need to understand people's attitudes towards the value of money. They should encourage saving for future security.
    Quote Year: 2013
    Nid: 1594
  • Body: It's important to have national standards for social security programmes. However, local governments are in a unique position to offer services more holistically.
    Quote Year: 2013
    Nid: 1592
  • Body: Social protection in partner countries is a key component in reducing poverty. Social protection funds can make a real difference in the lives of people in these countries.
    Quote Year: 2013
    Nid: 1591
  • Inclusiveness, equity & social protection

    In recent years the global economy has witnessed impressive growth in some developing countries, yet two-thirds of the world’s 1.5 billion poorest people now live in middle-income countries. Furthermore, globalisation has in some cases led to increased vulnerability and social polarisation.

    Inclusive, equitable and sustainable economic growth is a fundamental tenet of the European Union, which recognises its impact on long-term poverty reduction and growth. The EU’s development policy thus encourages more inclusive growth, namely via the promotion of social protection. Indeed, by increasing equity – e.g. through social transfers and better access to basic social services – social protection can support poverty reduction, social cohesion and stability.

    The 2011 Communication ‘An Agenda for Change’ called for a more comprehensive approach to human development, supporting increased access to quality health and education services and enhanced social protection in support of inclusive growth.

    The 2012 Communication ‘Social Protection in European Union Development Cooperation’ sought to explain the role of social protection in underpinning inclusive and sustainable development and the role of EU action in strengthening social protection policies and systems.

    In its February 2013 Communication ‘A Decent Life for All’, the EU notes that only 20 % of the world’s population has access to adequate social protection. With equity and social protection having a direct bearing on poverty eradication and sustainable development, the EU called on the post-2015 framework to ensure basic living standards and promote the drivers for inclusive and sustainable growth.