Transcript Reducing vulnerability and enhancing social protection

Reducing vulnerability and
enhancing social protection
Reducing vulnerability and
enhancing social protection
• Safety nets are crucial in improving growth:
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Create assets
Protect assets
Improve household allocation of resources
Protect individuals who are unlikely to benefit in the short term
from reforms
– Reduce inequality
• Conditional cash transfers:
– Conditional cash transfers have proven success in reducing
poverty in the short run (through cash that is given) and in the
long run (through the human capital formation that it encourages)
– However they are not a magic bullet – they do not work in every
country and they are not sufficient. Other investments such as
investments in schooling may be needed.
Reducing vulnerability and
enhancing social protection
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Social security:
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useful in targeting the young, unemployed and the elderly. In South Africa a cash transfer
program (unconditional) for parents with young children and the state old age grant have had
large impacts on reducing poverty.
There are challenges in implementing these programs: administrative efficiency and good
governance. Most importantly cooperation across actors as it is not the sole responsibility of
the government
In OECD countries social security has reduced poverty greatly (from 16% to 70%).
Can low income countries learn from OECD countries? A limited yes as there are differences
between OECD countries and low-income countries. Need to delink social security from
labour market status, increase financing from general taxation, create new institutions, take
important complimentary measures.
Health insurance:
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Per capita health insurance is an increasing function of GDP / capita, and aid increases the
amount spent on health care very little. Out of pocket expenditures by individuals for health
care decreases with income
We need to use the amount that individuals are paying and are willing to pay privately to
develop health insurance for the poorest
The provision of health care has to be contracted based on performance. Again,
complementary investments in health care are crucial.
Reducing vulnerability and
enhancing social protection
• Insurance
– There are means by which the poor – even in the absence of formal
insurance – insure themselves. Often through mutual insurance groups.
These groups do not insure perfectly, but can be used to develop more
comprehensive insurance.
– Also need to understand that one product will not fit all problems –
different types of risk have different challenges. Information is a big
problem for crop insurance and here weather based indexes can help.
– Insurance often crowds out credit, need to think about integrating credit
and insurance
• Ultimately a mix of all approaches is needed. The goal is to ensure
people do not find themselves constrained in making health,
education and production decisions and all these approaches have
their role.