Nepal Social Protection Index – Going Forward Suman K. Sharma, Ph.D. Meeting of Social Policy Indicators’ Experts in Asia ADB/ILO/OECD/Korea Policy Centre

NepalSocial Protection Index –

Going Forward

Suman K. Sharma, Ph.D.

Meeting of Social Policy Indicators’ Experts in Asia

ADB/ILO/OECD/Korea Policy Centre

19 – 20 November 2008

Seoul, South Korea

Suman Sharma, 19-20 Nov 2008, Seoul2

Presentation Outline

Nepal: Basic Statistics

Indicators of Social Protection Index (SPI): Features

Distribution of SP Expenditure SP Coverage Indicators - Largest SP programs

Updated SPI : Key aspects

Recent Initiatives

Going Forward: Future SPI

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Nepal : Basic Statistics

Total Population 27.6 m (2006) GDP Growth Rate (%) 2.5 (2007) Real inflation (%) 6.4 (2007) GDP per capita (US $) 320 (WDI) GDP per capita (2000 PPP $) 1379 Population below poverty line 31 (2004) Population below $1 a day poverty line 24.1 Female Life Expectancy 61.6 (2000-05) Children in total population (%) 38.5 (2006) Elderly in total population (%) 3.7 (2006) Average annual population growth (%) 2.0 Sources: Economic Survey, Ministry of Finance, GON 2008; Economic & Social Survey of Asia & Pacific 2008, UNESCAP 08

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Total Population 27.6 m (2006)GDP Growth Rate (%) 2.5 (2007)Real inflation (%) 6.4 (2007)GDP per capita (US $) 320 (WDI)GDP per capita (2000 PPP $) 1379Population below poverty line 31 (2004)Population below $1 a day poverty line 24.1Female Life Expectancy 61.6 (2000-05)Children in total population (%) 38.5 (2006)Elderly in total population (%) 3.7 (2006)Average annual population growth (%) 2.0

Sources: Economic Survey, Ministry of Finance, GON 2008;Economic & Social Survey of Asia & Pacific 2008, UNESCAP 08


NEPAL: Distribution of SP Expenditure by SP Category (2004/05)

Variable 2004/05

Social Insurance 45%

Area/Micro-based 21%

Labor Market Programs 21%

Social Assistance 8%

Child Protection 5%

Total SP Expenditure (NRs. in billions) 11.74

Share of tot SP exp in GDP (actual) 2.3%

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NEPAL: Distribution of SP Expenditure by SP Category (2002/03 and 2004/05)

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2002/03 2004/05

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Child Protection

Micro-Credit

Social Assistance

Social Insurance

Labour Market Programs

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NEPAL SPI: Summary of Results (2002/03 and 2004/05)

Variable 2002/03 2004/05

Social Protection Indicator (SPI) 0.16 0.19

SP Expenditure(actual) 2% 2%

SP Expenditure (scaled) 13% 14%

SP Coverage Indicator 15% 18%

SPDIST (SP Benefic who are poor) 31% 35%

SPIMP (average SP exp for each poor person / poverty line income)

7% 7%

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Updated SPI in 2004/05: Key Aspects - Expenditure (1)

Total SP expenditure = NRs. 11.7 b slightly above 2% of GDP

Almost 50% of the total SP expenditure was on Social Insurance

Micro/area based programs was the next most important SP expenditure component (accounting for slightly more than 20% of total SP expenditure)

Active Labour Market programs increased share to 16.4%.

Child protection accounted for a little more than 5%

Health financing increased to 4.8% - Greater community involvement

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Updated SPI in 2004/05: Key Aspects - Coverage (2)

Microcredit program tops the list- total beneficiaries 1.5 m

Next largest: Food for Work prgm –est beneficiry = 800,000 Educational assistance (est beneficiaries = 700,000), social

assistance (550,000) and loans for job creation programs SP programs in terms of poor beneficiaries:

Microcredit the highest followed by food-for-work program.

Out of the five, remaining three largest programs are: Educational assistance, Social assistance and Loans for

job creation. Except for relatively higher ranking of Food-for-work

program in 04/05, no significant difference in relative ranking of other programs

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Recent Initiatives (1)

Interim Plan (2007/10): re-emphasizes on Social Inclusion

Latest Budget Speech (2008/09) rearticulates inclusion:

Policy Priority: Completion of Peace process and immediate relief; Accelerated economic growth; Social security & inclusion

Immediate relief & rural construction:

(a) Relief & compensation for conflict affected people – relief to families of martrys/disappeared – subsistence/allowances

(b) Development of cooperative public dist system – guarantee supplies of goods at concessional rate for poor – Annual Rs. 100,000 to 4000 consumer cooperatives – coop shops will sell essential consumer goods to all poor (ID card)

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(c) Social Assistance Programs: modified effective Sept 08-senior citizen allowance: age bar relaxed in some cases – monthly Rs 500 for all age groups of endangered ethnicities & people from remote areas- monthly Rs 500 for Dalits, single women, people of 60+ years from Karnali Zone-monthly Rs 500 for all other citizens above 70 years of age - Disability allowances increased to monthly Rs 1000 for fully handicappend & disabled and Rs 300 for partically handicapped and disabled

(d) Debt relief to small farmers / HH entrepreneurs – debt waived for those affected by natural disasters & conflict; small farmers below poverty line and HH entrepreneurs

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Other SP Programs

-Disabled Student Support Program: scholarship to disabled student

- Food for Education Program: nutrition/health program, day-time tiffin; female school motivation

- Health: Women volunteer program; Free and Community Health Insurance Program

- Senior citizens: Senior Citizen Act; SC Healthcare program; Care Centres for SC; SC Treatment Program extended to 75 districts

- Programs for Disabled: ID cards distributed to all disabled in 75 districts; Vocational trainings; Community based reform program (25 dist); Nepal signed Protocal of Disabled Rights

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Programs for Child Rights

-Rehabilitation programs for children of prisoners

- Instant support for conflict-hit children (health, schooling)

- Legal aspect: Courts for children established

- Children Tracing Coordination Centres formed (free telephones)

- 1098 Child helplines in operation

- Separate legal provision regarding adoption of children

- Child labor alleviation program

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Going Forward: future SPI (1)

Data Collection Process: institutionalize in real sense: coordinating body -facilitate future exercise

Future SPI: Expand Coverage: Some aspects can be crucial : at least should provide an estimate of respective share(s) in SP components- Informal Support system: exist in rural areas/certain communities: Trust fund set up in advance; cooperation in kind; funeral expenses

- Social capital: measuring networks and social values

i) Levels of trust, (ii) Membership; (iii) Networks

What have they done about it? Contracts/Social Bonds?

- How about Remittances? Even official estimates are overwhelming – obvious implication on all 3 SP components; However, detailed micro level info tricky – need greater mobilization of local manpower

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Going Forward: future SPI (2): Demand Side of Equation

Don’t forget: Demand side of equation! – What kinds of risks and shocks they’re more afraid of and need protection from?

-Most common risks: health/life ;these shocks are predictable largely but some shocks can be unpredictable

- Disasters (natural and man-made): recent evidences show much more threatening

Risks are covariant in nature Traditional SP system breaks down

Any protection from such risks? Expenditure (Govt + others)? Preparedness measures? What can be done?

At a policy level, increasing need for better integration of poverty reduction and SP prgms w/ other sectoral issues

Future SPI need to take account of these aspects Suma

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Visualize Future NeedsApart from national level SPI, need disaggregated SPI? -

rural/urban divide given the dominance of rural poverty

ecological zones – Mountains, Hills and Terai? - SPI for South may be different from that for North ?

Let’s look into Definition of SP itself - Need to broaden the areas than those covered by traditional SP definitions? How about looking into SP for chronically poor as well apart from the transient poor? - Do we need differential treatment for each group of poor? Nepal’s chronic poverty research shows not all poverty determinants overlap

e.g., Lack of Human capital more closely associated with chronically poor than transient poor

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Future SP Adventure: A Joint Platform?-An apex body to ensure national level coordination -A joint platform encompassing all stakeholders – HHs, communities, local organizations, govt, NGOs, external actors involved in SP related activities-Mobilization of local bodies – Hhs, user goups, cooperatives, social mobilizers, NGOs, others…-More participatory-More accurate information on informal SP, remittances,….- Better to account for the demand aspects: What are the risks people are concerned of the most?

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Documents

Nepal Social Protection Index – Going Forward Suman K. Sharma, Ph.D. Meeting of Social Policy Indicators’ Experts in Asia ADB/ILO/OECD/Korea Policy Centre