- 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.