15 December 2014 Michael Samson Economic Policy Research Institute [email protected] SESSION 1: Developing a social protection agenda for equitable growth.

15 December 2014

Michael SamsonEconomic Policy Research [email protected]

SESSION 1:Developing a social

protection agenda for equitable growth in Tanzania

THE UNITED REPUBLIC OF TANZANIA - MINISTRY OF FINANCE

I

INTERNATIONAL CONFERENCESocial Protection: Building Effective and Sustainable Systems for Equitable Growth

Perspectives, Policies and Best PracticesDecember 15-17, 2014

International Conference Centre – Simba Hall, Arusha, Tanzania

2000 2012

SOURCE: Garcia and Moore (2012)

Social protection has grown rapidly in Africa

Social protection reduces poverty

in high-income countries

SOURCE: OECD AND ILO

SOURCE: OECD AND ILO

Social protection reduces poverty

in high-income countries

SOURCE: OECD AND ILO

Social protection reduces poverty

in high-income countries

Inequality is increasing in Tanzania

(as it is in most countries of the world)

poorest

richest

middle

Multi-dimensional impacts of SP

Poverty reduction

• Main aim of social protection

• Protects people from shocks and directly supports well-being

• Scaling up the PSSN in Tanzania is estimated to reduce extreme poverty

by 52%

Multi-dimensional impacts of SP

Human capital• Most documented secondary aim• Improves nutrition, education, and health outcomes • For both conditional and unconditional programmes

A major priority in countries like Tanzania and Uganda

‘Sensitive periods’ in early brain development

Binocular vision

0 1 2 3 7654

High

Low

Years

Habitual ways of respondingLanguage

Emotional controlSymbol

Peer social skillsRelative quantity

Central auditory system

Biological transmission mechanisms of social protection

Social protection represents an investment in human capital achieving the highest returns of any public investment

Heckman & Carneiro (2003) and Handa (2007)

Brain Growth

Human Capital Rates of Return

Pre-school School Post-School

Pre-school Intervention

Schooling

Job Training

Age

Evidence from child benefit programs aroundthe world document reductions in stunting

0%

5%

10%

15%

20%

25%

30%

35%

Bangladesh Cambodia Kenya Mexico boys Mexico girls Turkey

attri

buta

ble

incr

ease

in s

choo

l att

enda

nce

rate

Likewise, evidence from these programs around the world demonstrate increases in secondary school attendance

Multi-dimensional impacts of social protection

Livelihoods•A surprising impact •People use social protection benefits to support enterprises and labour market participation• Small but significant improvements in many countries

Human capital development promotes pro-poor growth

South Africa

Increase wages 60-130% more than the cost of transfers

Multi-dimensional impacts of social protection

Risk management

• A subtle but powerful impact• Protects people from shocks and directly supports well-being• Prevents further decline into poverty• Protects assets• Promotes productive risk-taking

Social Protection promotes better risk management and encourages investment

Social protection enables households to achieve more sustaining livelihoods

“If I didn’t get that 25,000 [Uganda schillings, about US$9/month], I would never have dreamt of owning these livestock. I would never have joined these groups. How would that have happened?”

Joyce Mary Adeke, a71 year old widow living in Moru village in Uganda’s Katakwi districtSOURCE: Government of Uganda,

http://www.socialprotection.go.ug/

Social protection improves labour market participation and employment

0%

10%

20%

30%

40%

50%

60%

70%

Out of LF Unemp., nosearch

Unemp.,searching

Employed

Labor force status, March 2005

CSG households Non-CSG households

n=3462 n=1795

Multi-dimensional impacts of social protection

Economic resilience•Enables the economy to better withstand external shocks•Provides an automatic stabiliser for the economy•Social protection provides efficient economic stimulus

Multi-dimensional impacts of social protection

Social cohesion• Social protection represents one of the most concrete and valued forms of government delivery• Strengthens the bond between State and people• Resulting social cohesion promotes private investment

Multi-dimensional impacts of social protection

Economic reform

• Social protection shares the benefits of economic growth• Makes any economic reform programme more pro-poor• Increases the likelihood of success of the reforms

Social protection reinforces social cohesion, facilitating economic reforms that promote pro-poor growth

Mauritius

Mauritius A half-century ago had

a poverty profile similar to any African country

Today, the lowest poverty rates on the Continent, and some of the highest growth rates over the past several decades

Social protection enabled a restructuring of the economy onto an export-led high growth path

Social protection invests in the economic sector most disadvantaged by a resource boom and helps to immunise against “Dutch disease”

Natural resources: boom or

curse? Mineral and energy wealth has

its advantages… But can intensify

macroeconomic instability and open a country to global shocks

It can intensify inequality It can undermine

competitiveness Social protection can help

counter all these adverse effects—by improving pro-poor policy, enabling households to deal with shocks, and investing in the sector whose competitiveness is most negatively affected

Multi-dimensional impacts of social protection

The case for social protectioninvolves a wide-ranging spectrum of social and economic impacts.

Soci

al P

rote

ction

Human Capital

Risk Management

Direct Production

Interventions

Local Economy Multiplier

Effects

b

c

Soci

al P

rote

ction

Human Capital

Risk Management

Direct Production

Interventions

Local Economy Multiplier

Effects

Short term labor supply

decisions

Higher labour

productivity

b

c

Employment-centred

Structural Transformation

Dec

ent R

ural

Em

ploy

men

t

Effective LabourSupply

Soci

al P

rote

ction

Human Capital

Risk Management

Direct Production

Interventions

Local Economy Multiplier

Effects

Short term labor supply

decisions

Higher labour

productivity

b

c

Employment-centred

Structural Transformation

Diversified rural

economy

Demand for goods and Services

Labour Demand

Dec

ent R

ural

Em

ploy

men

t

Effective LabourSupply

Intra-sectoral linkages

Inter-sectoral linkages

Inter-sectoral linkages

Uganda’s development planning framework can maximize economic growth impacts

Multi-dimensional impacts of social protection

Impacts reinforceeach other

• Poverty reduction further develops human capital• … further improving livelihoods• … bolstering risk management• … reinforcing resilience• …