NOW is the time to bring MENA's poor Into the net
This post is part of a blog series that we hope will provide some food for thought on the critical questions outlined in the forthcoming report on social safety nets.
Times of transition can be defining moments for social welfare systems. This is when these systems that are designed (or should be) to help the poorest and most vulnerable citizens come under scrutiny, a real stress test as to whether they can respond to those in need. Transitions are the time when critical re-thinking takes place and questions are asked about how existing systems can be reformed to meet the aspirations and expectations citizens have of a new day in their country. And often what’s missing is a good focus on how to make sure that the most-needy are included and that there is fair access to economic opportunity.
Most social safety net or welfare programs around the world were indeed introduced during periods of transition. The examples I can think of include events after the collapse of the former Soviet Union, Nepal’s transition to democracy, decentralization and subsidy reform in Indonesia and regime change in Brazil and Portugal. Most of these have remained in place ever since – and with good results overall.
This historic moment inspired a team of us at the World Bank to gather as much knowledge as we could to help governments in the Middle East and North Africa (MENA) use this opportunity. Our forthcoming report Inclusion and Resilience: The Way Forward for Social Safety Nets in the Middle East and North Africa looks at how renewed safety nets might help meet the key challenges of the poor and vulnerable in the region. It also examines the performance of existing systems in addressing these challenges. Importantly though, we also listened to citizens in a poll described in MENA Residents Put Onus on Government to Help the Poor. This listening provided vital insight into how to think about the types of policies that can be part of the agenda for safety net renewal.
Across MENA countries people are striving to improve their livelihoods in the face of multiple risks, ranging from economic crises, conflict or natural disasters, to unemployment, disability, and illness. For them, institutions that offer a chance to escape poverty and help build their resilience to crisis are essential. Key among these institutions are safety nets. Before the Arab Spring, many governments tended to rely on a redistribution system that protected against destitution through universal subsidies of basic consumption items. This system made sure all citizens had affordable access to food and fuel but it benefitted the rich more than the poor. When crises happened, as they do, the only available response was to scale up subsidies or to provide more and better-paid public jobs, usually for middle and upper classes. Of course this was popular, but can countries really afford this, can handouts to everyone be sustainable? Universal subsidies in the region make up 6 percent of GDP on average. Such a system also doesn’t empower citizens to prepare for a better livelihood themselves. And most importantly, because these systems have no targeting, many of the really needy and poor fall through the net and are left unprotected.
In the survey of citizen opinion we did with Gallup, our team found that the majority of a representative sample of adults in Egypt, Jordan, Lebanon, and Tunisia believe that social assistance programs should mainly target the poor (rather than the entire population) by providing direct cash transfers. This was really exciting to us because while this view is in line with the general agreement among leading experts on social assistance program design, and with global experience, it stands in stark contrast to practices in most countries of the region. When we analyzed household surveys from across the region, we found that many of the poor are not reached by safety nets at all, among them children and people in rural areas where vulnerability is high. Indeed many are on the brink of poverty with 15-17 percent of Egyptians, Yemenis and Iraqis having consumption levels that are no more than USD 0.5/day above the USD 2/day poverty line.
In writing the report and sharing the analysis we hope we have underlined both the urgency of a comprehensive reform of the welfare system in MENA and the opportune timing. Better results can indeed be achieved by rebalancing financing and priorities; by consolidating fragmented programs; by establishing reliable, flexible social safety nets administration systems; and by improving the impact of existing programs.
We have so much more to tell you about this report and some of the useful tools we’ve designed to go with it (have a look at the box). My colleagues and I will continue to share important messages from our findings and analysis through this blog, through our website and through social media. We hope you will engage in this discussion with us. Because here’s the bottom line: by mitigating the costs of the unforeseeable, by placing people with the fewest assets on a path of self-reliance, and by reducing the social and political cost of transformations, effective social safety nets represent THE policy lever that MENA countries can least afford to overlook during this epoch of change. Indeed, safety nets could be the vital component in achieving the very goals of the Arab spring, which spoke of inclusion and social justice.
Read the previous blog in the social safety net blog series:
Who should pay for the poorest in Lebanon?