Financing Social Protection · Presenter Dr. Michael Samson Economic Policy Research Institute Date 21 March 2018. TITLE | 2 Overview –Overview –Social protection financing patterns

Financing Social ProtectionSubject Financing Social Protection

Presenter Dr. Michael Samson

Economic Policy Research Institute

Date 21 March 2018

TITLE | 2

Overview

– Overview

– Social protection financing patterns and trends

– Social protection costing tools

• Static tools and their pitfalls

• The role of dynamic costing models

– Financing options

• Traditional models for financing

• Innovative options

– Financing inputs versus outcomes and the impact on the political economy of finance

– The role of comprehensive inter-sectoral approaches

– Conclusions

TITLE | 3

0 2 4 6 8 10 12

BeninBotswana

BurundiCote d'IvoireThe Gambia

GhanaGuineaKenya

MauritaniaMauritius

MozambiqueNamibia

NigerSenegal

Sierra LeoneSouth Africa

TanzaniaUgandaZambia

Zimbabwe

1995Latest

Percent of GDP

Public spending on social protection

TITLE | 4

Public spending on social protection

% of GDP

TITLE | 5

Static costing models• Cost = (Coverage x Benefit size) + Administrative cost

– The main drivers—benefit size and coverage—are policy choices

– Administrative cost reflects design decisions—targeting and conditionality add substantially to administrative costs

• Cost (% of GDP) = (Coverage as % of total population) x (Benefit size as a % of per capita income) x Admin multiplier – Example: A programme providing a benefit equal to 12% of per

capita GDP to each child, reaching 8% of the population, would require 0.96% of GDP at national scale.

• Static unit cost models can provide alarmingly high estimates of actual costs, particularly when implementation faces a long scale-up path

TITLE | 6

Dynamic costing models

Benefit size 2200

Coverage growth rate 9999%

GDP growth rate (%) 4.0%

Social protection growth impact 0.0%

Poverty reduction impact 0.0%

2.0%

Social Protection Systems Dynamic Costing ToolASSUMPTIONS

0.00%

0.25%

0.50%

0.75%

1.00%

20

18

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

20

44

20

46

20

48

20

50

20

52

20

54

20

56

Co

st o

f EC

E p

rogr

amm

e (

% o

f G

DP

)

No dividendsGrowth dividend onlyPoverty reduction dividend onlyGrowth and poverty reduction dividends

0%

50%

100%

20

18

20

21

20

24

20

27

20

30

20

33

20

36

20

39

20

42

20

45

20

48

20

51

20

54

Programme Coverage Rate (percentage)

0

2

4

6

201

8

202

0

202

2

202

4

202

6

202

8

203

0

203

2

203

4

203

6

203

8

204

0

204

2

204

4

204

6

204

8

205

0

205

2

205

4

205

6

Real GDP (trillions)

without growth dividend with

0

500

1,000

20

18

20

21

20

24

20

27

20

30

20

33

20

36

20

39

20

42

20

45

20

48

20

51

20

54

Number of ultra-poor households (thousands)

falling ultra-poverty fixed 10% target

TITLE | 7


Benefit size 2200





2.0%


0.00%

0.25%

0.50%

0.75%

1.00%

20

18

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

20

44

20

46

20

48

20

50

20

52

20

54

20

56

Co

st o

f EC

E p

rogr

amm

e (

% o

f G

DP

)


0%

50%

100%

20

18

20

21

20

24

20

27

20

30

20

33

20

36

20

39

20

42

20

45

20

48

20

51

20

54


0

2

4

6

201

8

202

0

202

2

202

4

202

6

202

8

203

0

203

2

203

4

203

6

203

8

204

0

204

2

204

4

204

6

204

8

205

0

205

2

205

4

205

6



0

500

1,000

20

18

20

21

20

24

20

27

20

30

20

33

20

36

20

39

20

42

20

45

20

48

20

51

20

54



TITLE | 8


Benefit size 2200





2.0%


0.00%

0.25%

0.50%

0.75%

1.00%

20

18

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

20

44

20

46

20

48

20

50

20

52

20

54

20

56

Co

st o

f EC

E p

rogr

amm

e (

% o

f G

DP

)


0%

50%

100%

20

18

20

21

20

24

20

27

20

30

20

33

20

36

20

39

20

42

20

45

20

48

20

51

20

54


0

5

10

201

8

202

0

202

2

202

4

202

6

202

8

203

0

203

2

203

4

203

6

203

8

204

0

204

2

204

4

204

6

204

8

205

0

205

2

205

4

205

6



0

500

1,000

20

18

20

21

20

24

20

27

20

30

20

33

20

36

20

39

20

42

20

45

20

48

20

51

20

54



TITLE | 9

Re-allocation of existing spending:

• Politically challenging because ofentrenched interests.

• Harmonising fragmented programmes.

Development partner support can be catalytic.

Borrowing:

• A politically risky option.• Multi-lateral banks provide billion-

dollar loans for social protection.

Domestic revenue (incl. taxation):

• Long-run sustainable option.• Can reduce tax burden over time.

0

5

10

15

20

25

30

351

2

3

4

Borrowing

Reprioritizing

and improving

efficiency

Domestic

revenue

DevelopmentPartner Support

Financing sources

TITLE | 10

Innovative funding

• Earmarking taxes

• Natural resource funds (sovereign wealth)

• Price subsidy reform

• Intersectoral councils

• Public/private partnerships

• Equitable distribution models: greater allocations to more vulnerable areas and schools (South Africa)

TITLE | 11

The role of comprehensive

inter-sectoral approaches

– The importance of inter-sectoral synergies in financing social protection and the achievement of the Sustainable Development Goals more broadly

– Financing inputs versus outcomes and the impact on the political economy of finance

– How comprehensive inter-sectoral approaches build synergies that multiply developmental impacts

TITLE | 12

Recent medical research documents the role of

social protection in building “cognitive capital”

• In the past year, leading medical research authorities have done something that their academic medical journals rarely do…

• …They have weighed in on global economic policy…

• …with a common theme: “Investing in children (through ECCE and ECD) is the most productive pathway to long-term economic prosperity.”

• The evidence highlights a key finding: “Early childhood investments generate extra-ordinary rates of return—socially and economically—along complex pathways.”

TITLE | 13

Edu

cati

on i

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inve

stm

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Nut

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Soc

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anit

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Soc

ial c

are

serv

ices

Liv

elih

oods

pro

gram

mes

Infr

astr

uctu

re in

vest

men

t

Reduced stunting

Human capital development

Healthy strong families

Child well-being

Decent work

Social inclusion

Social development

Economic growth

Policies and programmes (INPUTS)

Policy and programme matrix

Policy objectives (OU

TPUTS)

TITLE | 14

Edu

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TPUTS)

TITLE | 15

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TPUTS)

TITLE | 16

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TPUTS)

TITLE | 17

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CALCULATOR MODE

TITLE | 18

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CALCULATOR MODE

+1

TITLE | 19

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TITLE | 20

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TITLE | 21

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TITLE | 22

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TITLE | 23

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TITLE | 24

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+1+1

TITLE | 25

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CALCULATOR MODE

+1

+29%

+1

TITLE | 26

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CALCULATOR MODE

TITLE | 27

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Social inclusion

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Economic growth




TPUTS)

CALCULATOR MODE

+1 +1+1 +1 +1 +1 +1 +1 +1

TITLE | 28

Edu

cati

on i

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ents

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on in

terv

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ons

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Child well-being

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Social inclusion

Social development

Economic growth




TPUTS)

CALCULATOR MODE

+1

+84%

+1+1 +1 +1 +1 +1 +1 +1-93%

+97%

+89%

+67%

+47%

+78%

+6%

TITLE | 29

The challenge of single sectoral approaches aiming for

complex outcomes (reducing stunting) with a single

intervention: single-sector approaches often do not work

0

5

10

15

20

25

30

100 150 200 250 300 350

Stu

nti

ng

rate

(%

)

Public spending on nutritionsingle sector intervention: stunting rate (%)

cross-sectoral intervention: stunting rate (%)

GOAL = ZERO STUNTING

gap

TITLE | 30

0

5

10

15

20

25

30

100 150 200 250 300 350

Stu

nti

ng

rate

(%

)

Public spending on nutritionsingle sector intervention: stunting rate (%)

cross-sectoral intervention: stunting rate (%)

Cross-sectoral approaches—including nutrition, health,

education, WASH, social protection, and child protection

can achieve the SDGs, and more cost-effectively

GOAL = ZERO STUNTING

TITLE | 31

Districts that invest adequately in cross-sectoral

approaches find health expenditure is more efficient

in achieving nutrition objectives

Low co-financers

High co-financers

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0 1 2 3 4 5 6

Was

tin

g P

reva

len

ce

Log Per Capita Health Expenditure

TITLE | 32

Conclusions• Costing social protection systems provides vital

information for moving forward to scale

• Costing depends critically on policy choices—and a dynamic costing provides a practical and more inviting financial roadmap

• A range of financing mechanisms exist, and development partners can play a catalytic role

• Social protection aims to achieve vital impacts that: deliver children’s and adults’ rights, promote equity, strengthen child development and other developmental outcomes, and build the foundation for inclusive social development and equitable economic growth…

• …These core aims broaden the framework for costing and financing to include more comprehensive, integrated and effective solutions.

THANK YOU FOR YOUR TIME

Documents

Financing Social Protection · Presenter Dr. Michael Samson Economic Policy Research Institute Date 21 March 2018. TITLE | 2 Overview –Overview –Social protection financing patterns