i

Social Safety Nets and Productive Outcomes: Evidence and Implications for Bangladesh

This study was conducted by:

Faculty of Agricultural Economics and Rural Sociology Bangladesh Agricultural University, Mymensingh

Principal Investigator: Dr. Ismat Ara Begum

Bangladesh Agricultural University

Co-Investigators: Prof. Dr. Shaheen Akter

North South University

Dr. Mohammad Jahangir Alam Bangladesh Agricultural University

Prof. Noor Md. Rahmatullah

Sher-e-Bangla Agricultural University

This study was carried out with the support of the

National Food Policy Capacity Strengthening Programme

[Type a

February 2014

This study was financed under the Research Grants Scheme (RGS) of the National Food Policy Capacity Strengthening Programme (NFPCSP) Phase II. The purpose of the RGS is to support studies that directly address the policy research needs identified by the Food Planning and Monitoring Unit of the Ministry of Food. The NFPCSP is being implemented by the Food and Agriculture Organization of the United Nations (FAO) and the Food Planning and Monitoring Unit (FPMU), Ministry of Food with the financial support of EU and USAID. The designation and presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of FAO nor of the NFPCSP, Government of Bangladesh, EU or USAID and reflects the sole opinions and views of the authors who are fully responsible for the contents, findings and recommendations of this report.

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Executive Summary

Introduction and Background

The most crucial challenge threatening Bangladesh is eliminating widespread poverty. Although since 2005 the poverty rate has declined by 1.7 percent per annum at national level, 31.5 percent of households in the country still live in poverty (HIES, 2010). Therefore, one of the main agenda of the Government of Bangladesh is reduction of poverty.

Social safety net programmes (SSNPs) are non-contributory transfer programmes designed and implemented for the poor and vulnerable groups of society. During the last several decades many countries in the world implemented a variety of such programmes to protect vulnerable and underserved people as well as to promote their welfare. As in many other developing countries, SSNPs in Bangladesh can play a vital role in reducing poverty. Though Bangladesh has a comprehensive portfolio of both food and cash-based SSNPs, fruits are yet to be reaped more effectively. SSNPs in Bangladesh are a more than necessary element in fighting poverty as an increasing number of the population continue to be added to extreme poor.

Due to the high incidence of shocks and the large vulnerable population, the government of Bangladesh has raised safety net expenditures steadily since the mid 1990s. Currently, safety net spending is around 15 percent of the government expenditure in Bangladesh (Barkat et al., 2011). About 24.6 percent of households participated in the programmes in 2010 (HIES, 2010). These programmes directly transfer resources to poor people. The programmes are designed to develop infrastructure, provide education incentives to the poor student, ease disaster consequences, or provide livelihood support to disadvantaged groups such as the widowed, deserted and destitute, aged and the disabled. The extent of their productive impacts is not yet analyzed in great detail.

The objectives of this research are:

(i) To document potential productive impacts of selected public safety nets at the household and community levels and the possible incentive framework behind those results at the two levels;

(ii) To identify successful examples of government and NGO safety net interventions which foster productive outcomes; and

(iii) To draw implications for the design and implementation of SSN in Bangladesh and for complementarities among government agencies interventions.

Methodology/Analytical Framework

Analytical framework for household level impact analysis

To this end we used propensity score matching (PSM) method to identify matched comparison group for different productive outcomes to assess the impact attributed to social

ii

safety net intervention. The outcome variables chosen were related to (i) changes in labour allocation/employment, (ii) income generating activities, (iii) investments in land, tools, animals, family enterprises, durable goods and housing improvements, (iv) investments in human capital, and (v) changes in coping mechanisms.

The main advantage of PSM is that this approach does not necessarily require a baseline or panel survey (especially for the outcome variables) but the observed covariates to estimate the propensity score would have to satisfy the conditional independence assumption (CIA). This means that the observed covariates are not affected by participation.

There is no comprehensive list of clearly relevant covariates that will assure that the matched comparison group will provide an unbiased impact estimate. For each evaluation, it is important to consider what factors make the comparison units (control group) distinct from treated units (participant group). One obvious set of factors to include in PSM estimation are explicit criteria used in determining participation in the intervention, such as a project or programme’s eligibility or admission criteria (factors associated with both self-selection as well as administrative selection). We used this guiding principle and parsimony to select covariates and used probit model to estimate propensity scores.

Analytical framework for community level impact analysis

Considering village as a community, we assessed the outcomes at this level using secondary evidences and a qualitative fieldwork. The tools used for qualitative fieldwork are focus group discussions (FGDs) and key informant interviews (KIIs). FGDs were conducted with the beneficiaries of selected SSNPs as well as with eligible non-beneficiaries. The checklist of FGD included some quantitative information along with qualitative descriptions by the respondents, such as responses to open questions regarding the impacts on the local goods (i e. buying-selling activities, prices etc), labour markets (new employment, employment diversification, wages etc), and multiplier effects (investment, economic growth).

Data Sources

The study uses both primary and secondary data. The quantitative data source for this study is the HIES, 2010. Total sample size of the survey was 12,240 households, where 7,840 households were from rural area and 4,400 from urban area. HIES 2010 includes 30 SSN programmes. A complementary qualitative fieldwork conducted at the community level through the FGDs and KIIs constituted the primary data set for the research.

Sampling for Household Level Analysis

After preliminary exploration into the HIES data, it was revealed that out of the 30 SSNPs included in the HIES 2010, at least 22 programmes had less than 100 beneficiaries. From these 30 public SSNPs, this study considered interventions such as (1) old age allowance (OAA), (2) allowances for the widowed, destitute and deserted women, (3) agriculture rehabilitation, (4) stipend for primary students, (5) stipend for secondary students and (6) a combination of cash for work, vulnerable group development (VGD), food for work and 100 days employment scheme.

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Sampling for Community Level Field Survey

There were 530 primary sampling units (PSUs) out of 612 PSUs in HIES 2010 survey where SSNP participants were interviewed. Out of these 530 PSUs, 369 were rural and 161 were urban. The study selected 30 PSUs proportionately from both rural and urban PSUs covering all six divisions1. The selected number of rural PSUs were 5, 4, 5, 2, 2 and 3 from Dhaka, Chittagong, Rajshahi, Barisal, Sylhet and Khulna division, respectively. The chosen urban PSUs were 2, 1, 2, 1, 1 and 2 from Dhaka, Chittagong, Rajshahi, Barisal, Sylhet and Khulna division, respectively. Thus the total number of rural and urban PSUs were 21 and 9, respectively.

The study conducted around 30 FGDs with average number of participants of around 10 in purposively selected villages in the selected PSUs. Out of 30 FGDs, 20 (14 rural and 6 urban) were conducted with beneficiaries and 10 (7 for rural and 3 for urban) were with non-beneficiaries. However, half of the FGD participants were drawn from women where relevant.

The study also conducted 15 KIIs to gather data with officials at different levels (local and central) of ministries implementing the SSN programmes and NGOs. The KIIs were conducted with Union Parishad (UP) Chairman, UP member (male and female), Teacher (male and female), large farmer, UP secretary, NGO officials etc.

Findings from Household Level Impact Analysis

Key findings from the household level impact analysis are:

Agriculture rehabilitation programme (ARP) is a promising means of safety net for marginal and small farmers. This programme generated significant effects on farm and non-farm income generating activities, labour allocation, and investment in agricultural assets and inputs.

Old age allowance (OAA) and allowance for widowed, deserted and destitute (AWDD) are making positive contribution to some productive outcomes but not significant. OAA is meant for protecting poor elderly people from insecurity and the monthly transfer was very low (Tk. 300/month, which was less than US$ 4.00/month). These poor elderly people have to spend this low allowance on food and health care. So the contribution of OAA beyond protection is expected to be low, as we found through our quantitative analysis. Though not significant, the positive OAA-productive outcomes nexus indicates that the increasing amount of OAA would contribute to outcome beyond protection.

Safety nets in primary and secondary education programmes are also playing little role on short term impact on productive outcome, but these programmes should have

1 Division is the largest administrative unit in Bangladesh and comprises several districts; under each district there are several Upazillas.

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potential long term roles through human capital development. The long-run assessment is beyond the scope of this study.

The employment generation programme for hard core poor (EGP) and food for work (FFW) are well targeted programmes for the extremely poor people. These programmes have potential to create productive outcome. Unfortunately, impact of these programmes could not be analyzed separately due to inadequate sample size in the HIES 2010 data set. However, overall assessment of SSNPs is based on 5635 households of which 1795 were beneficiaries of all selected SSNPs. Impact was significant for income generating activities (farm), labour allocation (farm self-employment), and investment (agricultural inputs). Demand for credit was found to be reducing after getting supports from the selected SSN. The results indicate that the selected safety net programmes are promising means of protection and generate productive outcomes for the vulnerable groups.

Overall, considering the impact of all SSNPs which are being implemented simultaneously, impact on many productive outcomes are significant. Beneficiaries' engagement was higher with non-farm activities and lower with farm activities. Beneficiaries earned significantly higher income from non-farm sector but lower income from farm sector. Surprisingly the increase in income from non-farm sector is less than the decrease in income from farm sector. This is because they were reducing more days in the farm than utilizing added self-employment in the non-farm sector. This indicates that beneficiaries may work less due to SSNPs, though they are investing in productive sectors. It is worth noting that SSNP system as being composed of a set of different interventions is actually generating productive outcomes significantly. This implies that policymakers should think of implementing a number of interventions simultaneously because different interventions are suitable for different productive outcomes.

Findings from Community Level Impact Analysis

Key findings from the community level impact analysis are:

Consumption and health were most common heads on which beneficiaries spent major share of their received SSNP supports. The FGD participants reported that they had spent 39 and 28 percent of their SSNP supports on consumption and health care, respectively followed by household items (13 percent), investment (8 percent), school cost (5 percent), others (5 percent) and savings (2 percent). Almost half of the beneficiaries of OAA spent their full receipt on purchase of medicine. Investment and schooling related expenses were very little: rather buying daily essentials, medicine and repayment of credit were major areas of disposing SSNP supports.

Many of the male and female beneficiaries reallocated their labour from agricultural activities to non-agricultural activities. Non-agricultural activities include, rickshaws

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van pulling, mason, day labourer, running small business, paddling of vegetables/daily essentials, etc.

Investment avenues of SSNs are mainly starting small businesses, such as grocery shop, library, cloth store, dispensary, electronics shop, tea-stall, vegetable shop, cosmetics shop etc. These businesses are found to be increasing in the study areas. About 84 percent of SSNP participants mentioned that they invested in these type of businesses from SSNP supports.

FGD participants mentioned about many indicators of changes in small businesses. Demand for necessary agricultural/non-agricultural products to the local/village markets are rising. Driven by this demand, small businesses are increasingly expanding. Increasing number of grocery and electronic shops are supplying different kinds of products driven by demand. People are also increasingly investing in the non-agricultural sector, high value products, etc. Changes in selling/buying of agricultural/non-agricultural products to the local/village markets were experienced by most of the beneficiary participants. Beneficiaries were also getting the opportunity to sell their household and home gardening products.

Soaring prices in general affected peoples’ purchasing power badly. FGD participants identified that population growth-driven increase in demand was responsible for the increase in general price level. SSNP supports are not responsible for the increase in prices of essential goods and services. This view was expressed by 94 percent of the beneficiary participants. They mentioned that the SSNP supports are extremely small and very few people are the participants. Such a minor group of people with extremely small amount of supports cannot influence the price level.

More than 50 percent (44 out of 76 percent) of beneficiary participants mentioned that they faced shocks and informed that increased prices of daily commodities (necessary commodities) were the main shocks. The SSNP beneficiary participants followed several strategies to cope with the shocks and supports were also a means of coping mechanism. The supports enable them to be credit worthy, provided them with cash that has enhanced purchasing capacity. About 59 percent of the SSNP beneficiary participants stated that the support was very helpful during shocks.

It is also evident from the FGDs that SSNs benefit the communities as a whole. In spite of small amount of money and small number of beneficiaries, the whole community benefitted from the SSNPs. About 99 percent of SSNP beneficiary participants expressed that the whole community benefitted from SSNPs. SSNP supports helped themselves as well as their families, neighbors, local shopkeepers, grocery shop owners, dispensary owners and community as a whole.

There are some SSNPs through which infrastructures (e.g. construction and repair of road, dike and market place etc.) are being made in rural areas. About 79 percent of non-beneficiary participants stated that constructions and repairs of roads and bridge were made by SSNP supports in their locality. These infrastructures improved the communication and marketing systems of the study areas.

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Conclusions and Recommendations

Based on the above findings, the following conclusions and recommendations are made:

As in many other developing countries, social safety net programmes (SSNPs) in Bangladesh can play a vital role in reducing poverty. During last several decades many countries in the world implement a variety of such programmes to serve the vulnerable and underserved people as means of `protection as well as `promotion`. SSNPs in Bangladesh are more than a necessary element in fighting poverty as an increasing number of population are being added to the segment falling below the lower poverty line. Due to the high incidence of shocks and the large vulnerable population, the government of Bangladesh has raised safety net expenditures steadily over time.

From the household level analysis we conclude that ARP is more linked to productive outcomes but not a panacea for all problems. Different interventions are producing different outcomes and their combined impact is significant. SSN system as being composed of a set of different interventions is thus capable to generate productive outcomes. This implies that policymakers should think of implementing a number of interventions simultaneously, because different interventions are suitable for different productive outcomes.

From community level survey the study found consumption and health were most common heads on which beneficiaries spent major share of their SSNP supports. The FGD participants reported that they spent 39 and 28 percent of their SSNP supports on consumption and health care, respectively. Almost half of the beneficiaries of OAA spent their full receipt on purchasing medicine. Investment and savings from the SSNPs are low due to extremely lower amount of supports. However, considering community as a whole the FGD participants opined that the community is gaining due to SSNPs. Their view is consistent with finding from the quantitative analysis that we need different SSNPs to reduce complex problems in the community.

Coping shocks would be difficult in absence of different SSNPs. About 59 percent of the SSNP beneficiary participants stated that the support was very helpful during shocks. It is also evident from the FGDs that the communities had nothing to lose from SSNPs, rather than gaining.

From the extensive literature review and our qualitative assessment we identified insufficient co-ordination between the different agencies causing obstacles to implementing SSNPs. The challenges are associated with the targeting, implementation, monitoring and transparency of safety nets, and lack of coordination. Administrative costs could be reduced through better coordination.

The study analysed only the SSN programmes which had sufficient number of sample in HIES 2010. Therefore it was not possible to estimate the impact of cash, food and work based SSN intervention separately.

We therefore recommend to expand SSNPs as a system comprising different sets of interventions giving emphasis to the following points.

Social safety nets and their scope should be defined clearly

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Amount of safety net should be increased, particularly for ARP and OAA Implementation of SSNPs should be supervised strictly to reduce political and

personal nepotism, bribery and improper prioritizations Coordination among departments implementing SSNPs should be strengthened Dissemination of the eligibility criteria of the safety net programmes should be

widely circulated.

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TABLE OF THE CONTENTS Pages EXECUTIVE SUMMARY i TABLE OF THE CONTENTS viii LIST OF TABLES xi LIST OF FIGURES xiv LIST OF APPENDIX TABLES xv ABBREVIATIONS AND ACRONYMS xvi CHAPTER 1 INTRODUCTION 1-12

1.1 Background of the Study 1 1.2 An Overview of Social Safety Net Programmes in

Bangladesh 1

1.3 Broad Research Objectives 10 1.4 Key Research Questions, Hypotheses and Underlying

Assumptions 10

1.5 Link between Research Questions and Output 11 CHAPTER 2 LITERATURE REVIEW 13-24

2.1 Introduction 13 2.2 Social Safety Nets - Around the Globe 13 2.3 Productive Outcomes of SSNPs at Household Level 14

2.3.1 Social Safety Nets: Global Perspective 15 2.3.2 Social Safety Nets: National, GO and NGO literature 19

2.4 Productive Outcomes of SSNPs at Community Level 22 2.5 Lessons and Implications for the Study 23

CHAPTER 3 METHODOLOGY 25-38 3.1 Introduction 25 3.2 Conceptual Framework 25 3.3 Data Sources 29 3.4 Sampling for Household Level Analysis 29 3.5 Sampling for Community Level Field Survey 33 3.6 Analytical Framework 34

3.6.1 Framework for household level impact analysis 34 3.6.2 Framework for community level impact analysis 37

CHAPTER 4 PRODUCTIVE OUTCOMES OF SAFETY NETS IN BANGLADESH: RESULTS FROM SECONDARY AND PRIMARY DATA

39-85

4.1 Introduction 39 4.2 Descriptive Analysis 39 4.3 Estimation Procedure of Productive Outcomes at Household

Level 45

4.4 Variables in PS Estimation 49 4.5 Results and Discussions (Household level: Programme wise) 50

4.5.1 Old Age Allowances (OAA) Programme 51 4.5.2 Agriculture Rehabilitation Programme (ARP) 53

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4.5.3 Allowance for the Widowed, Deserted and Destitute (AWDD) Programme

55

4.5.4 Impact of Stipend for Primary Education (SPE) 57 4.5.5 Impact of Stipend for Secondary and Higher

Education (SSHE) 58

4.5.6 Impact of Combined Programme 60 4.5.7 Impact of all selected SSNPs 61 4.5.8 Conclusions 63

4.6 Community Level Impact: Evidence from Qualitative Survey 65 4.6.1 Focus Group Discussion with Beneficiaries 65 4.6.1.1 SSN supports and their utilization 65 4.6.1.2 Labour markets 67 4.6.1.3 Goods markets 68 4.6.1.4 Coping mechanisms and multiplier effects 70 4.6.1.5 Gender inequality 73 4.6.1.6 Recommendations and adjustments 75 4.6.1.7 Problems in obtaining SSN supports 75 4.6.1.8 Suggestions to improve effectiveness of the

existing SSNPs 75

4.6.2 Focus Group Discussion with SSNP Eligible Non-Beneficiaries

76

4.6.2.1 Basic information about FGD participants (eligible non-beneficiaries)

76

4.6.2.2 Labour Markets 77 4.6.2.3 Goods Markets 78 4.6.2.4 Coping mechanisms, gender inequality, multiplier

effects & NGO 79

4.6.2.5 Expansion of existing SSNPs 81 4.6.2.6 Problems in obtaining SSN supports 82 4.6.2.7 Suggestion to improve effectiveness of the

existing SSNPs 82

4.7 Findings of KIIs 82 4.8 Conclusions 83

CHAPTER 5 PRODUCTIVE OUTCOMES OF SAFETY NET PROGRAMMES: REVIEW OF EVIDENCE 86-108

5.1 Introduction 86 5.2 Productive Outcomes of SSNPs in Bangladesh 86

5.2.1 Income/savings 86 5.2.2 Food consumption/ nutrition/ food expenditure/

household expenditure/food security of the beneficiaries

87

5.2.3 Asset creation (land /households /livestock/poultry 88 5.2.4 School enrolment and reduce dropout 88 5.2.5 Access to credit 89

5.3 Productive Outcomes of SSNPs in South Asia Excluding Bangladesh

89

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5.3.1 Income/savings 89 5.3.2 Food consumption/nutrition/food expenditure/

household expenditure/ food security of the beneficiaries

90

5.3.3 School enrolment and reduction of dropout 90 5.3.4 Agricultural investment/productivity/land ownership 90 5.3.5 Access to credit 90 5.3.6 Risk bearing ability/coping 91 5.3.7 Starting new business and employment 91

5.4 Productive Outcomes of SSNPs Around the Globe 91 5.4.1 Income/savings 91 5.4.2 Food consumption/nutrition/food expenditure/

household expenditure/ food security of the beneficiaries

92

5.4.3 Asset creation (land /households/livestock/poultry) 93 5.4.4 School enrolment and reduction of dropout 93 5.4.5 Agricultural investment/productivity/land ownership 94 5.4.6 Access to credit 95 5.4.7 Risk bearing ability/coping 95 5.4.8 Starting new business and employment 96

5.5 Determination of relative strength and weakness of social safety net programmes

97

5.6 Method of determining relative strength and weakness of social safety sets

100

CHAPTER 6

IMPLEMENTATION AND COORDINATION MECHANISM OF SAFETY NET PROGRAMMES 109-135

6.1 Beneficiary Selection and Implementation Process of Selected SSNPs

110

6.1.1 Old Age Allowance 110 6.1.2 Allowance for Widowed, Deserted and Destitute

(AWDD) 115

6.1.3 Agriculture Rehabilitation Programme (ARP) 119 6.1.4 Primary Education Programmes targeting the poor 123 6.1.5 Secondary School Stipend Programme 130

CHAPTER 7 CONCLUSIONS, RECOMMENDATIONS 136-138 ACKNOWLEDGEMENT 139 REFERENCES 140

Annex -I Appendix Tables 151-152 Annex-II FGD Checklists 153 KII Checklists 163

List of Tables

Table No. Title Page Table 1.1 Major types of SSNPs in Bangladesh 2 Table 1.2 Coverage of selected safety net programmes and budgetary 5

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allocation, from 2009-10 to 2012-2013 Table 1.3 An overview of selected safety net programmes 6

Table 1.4 Research framework: hypotheses, research questions and underlying assumptions

10

Table 1.5 Research outputs, research questions and mode of answering 11 Table 2.1 Selected SSN interventions and their objectives 20

Table 3.1 Number and percent of beneficiaries of different SSNPs in HIES 2010

30

Table 3.2 Household level frequency of participants in SSNPs in HIES 2010 31 Table 3.3 Participant and non-participant of SSNPs in HIES 2010 31 Table 3.4 Distribution of causes of not being included in major SSNPs 32

Table 3.5 Number of beneficiary household of the selected SSNPs in HIES 2010

32

Table 3.6 Division wise SSNPs beneficiary rural and urban PSUs 33

Table 3.7 Division wise number of beneficiary household in rural and urban PSUs

34

Table 4.1 Percentage distribution of beneficiary households by size of household and residence (rural-urban)

40

Table 4.2 Percentage distribution of beneficiary households by age of head of the household and residence (rural-urban)

40

Table 4.3 Percentage distribution of beneficiary households by selected household characteristics (rural –urban)

41

Table 4.4 Percentage distribution of beneficiary households by land ownership and residence (rural-urban)

42

Table 4.5 Type of total benefit received by the SSNP beneficiaries (as per HIES data 2010) over time

42

Table 4.6 Distribution of individual beneficiaries by land ownership category of households

43

Table 4.7 Distribution of individual programmes beneficiaries by literacy status

43

Table 4.8 Shocks faced by households 44

Table 4.9 Statement on declining in income, assets, food production and food purchased due to shocks

44

Table 4.10 Measurable productive outcome indicators at household level 46

Table 4.11 Number of beneficiary households along with criteria of the selected SSNPs

48

Table 4.12 Observable characteristics included as dependent & independent variables in the PSM models

49

Table 4.13 Indicators of covariate balancing by variable, OAA, 2010 50 Table 4.14 Average bias and test statistics, PSM analysis, OAA programme 51

Table 4.15 Impact of Old Age Allowance on productive outcomes in Bangladesh, 2010

53

Table 4.16 Average bias & test statistics, PSM analysis, Agriculture Rehabilitation Programme

53

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Table 4.17 Impact of Agriculture Rehabilitation Programme on productive outcomes, 2010

54

Table 4.18 Average bias and test statistics, PSM analysis, Allowance for the Widowed, Deserted and Destitute Programme, Bangladesh

55

Table 4.19 Impact of AWDD on productive outcomes in Bangladesh, 2010 56

Table 4.20 Average bias and test statistics, PSM analysis, Stipend for primary education programme, Bangladesh

57

Table 4.21 Impact of primary school stipend on productive outcomes in Bangladesh, 2010

58

Table 4.22 Average bias and test statistics, stipend for secondary and higher education programme, Bangladesh

58

Table 4.23 Impact of SSHE programme on productive outcomes in Bangladesh, 2010

59

Table 4.24 Employment generation based social safety net programmes in Bangladesh

60

Table 4.25 Average bias and test statistics, all selected SSNPs, Bangladesh 61

Table 4.26 Impact of all selected SSNPs on productive outcomes in Bangladesh, 2010

62

Table 4.27 Impact of selected SSNPs on productive outcomes in Bangladesh, 2010

63

Table 4.28 Gender wise distribution of FGD participants 65 Table 4.29 Distribution of beneficiary FGD participants by SSNPs 66 Table 4.30 SSNP supports spent by the FGD participants 66 Table 4.31 Investment of SSNP supports during November 2011 to October

2012 66

Table 4.32 Changes in HH income with SSN supports 67 Table 4.33 Reasons for increase in HH income 67 Table 4.34 Hire out of labour by the SSNP beneficiaries because of SSN

supports 68

Table 4.35 Changes in general labour wage 68 Table 4.36 New business starting –up 68

Table 4.37 Change in selling/buying of agricultural/non-agricultural products to the local/village markets

69

Table 4.38 Buy/sell from/to outside markets 69 Table 4.39 Changes in general price level 70 Table 4.40 SSN supports affect general price level 70 Table 4.41 FGD participants experienced shocks 70 Table 4.42 Coping mechanisms during shock 71 Table 4.43 Changes in coping mechanisms due to SSN support 71 Table 4.44 FGD participants need for risk resilience and coping 71 Table 4.45 Winners and losers in the community because of SSN support 72 Table 4.46 Infrastructure (e.g. construction and repair of road, dike and

market place etc.) made by SSNs support in the study areas 72

Table 4.47 Infrastructure made by SSNs support in the study areas 72

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Table 4.48 Decisions made by the FGD participants in spending SSN supports

73

Table 4.49 SSN supports changed the relationship between men and women within family

73

Table 4.50 SSN supports change in the relationship between men and women within family

73

Table 4.51 Who used social safety net supports more effectively? 74 Table 4.52 FGD participants’ response about more effective SSNPs 74 Table 4.53 Problems in obtaining SSN supports identified by the FGD

participants 75

Table 4.54 FGD participants’ suggestions to improve effectiveness of the existing SSNPs

75

Table 4.55 Annual HH income spent by the SSNP eligible non-beneficiaries 76 Table 4.56 Changes in HH income of SSNP eligible non-beneficiaries 76 Table 4.57 Present activities doing by FGD participants due to some people

are getting SSNPs support 77

Table 4.58 Changes in activities due to some people are getting SSNPs support

77

Table 4.59 Hire out of labour by the SSNP eligible non-beneficiaries because of SSN supports

77

Table 4.60 Changes in general labour wage 78 Table 4.61 New business starting –up 78 Table 4.62 SSN supports are offering new market opportunities for all people 78 Table 4.63 SSN supports affect general price level in the community 79 Table 4.64 Experienced shocks by SSNP eligible non-beneficiary participants 79 Table 4.65 Coping mechanisms during shock experienced by the SSNP

eligible non-beneficiaries FGD participants 80

Table 4.66 Household decisions made by the SSNP eligible non-beneficiaries FGD participants

80

Table 4.67 SSNP eligible non-beneficiaries lose because of the SSNs in their community

81

Table 4.68 Infrastructure (e.g. construction and repair of road, dike and market place etc.) made by SSNs support in the study areas

81

Table 4.69 Infrastructure made by SSNs support in the study areas 81 Table 4.70 Main impacts of selected SSNPs at household level and

community levels 84

Table 5.1 Productive Outcomes affected by SSNPs 97 Table 5.2 Programme-wise impact of SSNPs in Bangladesh 98 Table 5.3 Programme-wise impact of SSNPs in South Asia (excludes

Bangladesh) 99

Table 5.4 Programme-wise Impact of SSNPs in the World (excludes South Asia)

100

Table 5.5 Productive outcomes: Strength and weaknesses of worldwide programmes

101

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Table 6.1 Social safety net programmes in Bangladesh, 2010 109 Table 6.2 Year wise statistics of the distribution of the Old Age Allowance 111 Table 6.3 Average annual benefit (Tk./household) from OAA, 2010 112 Table 6.4 Percentage distribution of households by OAA programme by

division, 2010 112

Table 6.5 Statistics of the distribution of the Widow Allowance since inception 116

Table 6.6 Average benefit per household from ARP, 2010 (Tk.) 120 Table 6.7 Coverage of ARP and budgetary allocation, from 2009-10 to

2012-13 120

Table 6.8 Distribution of households by Old Age Allowance by division, 2010 121

Table 6.9 Key indicators of child education in Bangladesh, 2000-2010 125 Table 6.10 Average benefit from stipend for secondary & higher secondary

female student 131

Table 6.11 Distribution of households of Old Age Allowance by division, 2010 131

Table 6.12 Under NFSP, the amount provided to the female students of grades 6-10 as stipend, subsidy to the institutions against tuition fees and other fees

132

Table 6.13 Implementing agencies of social safety net programmes 134

List of Figures

Figure No. Figure Page Figure 3.1 Conceptual framework 28 Figure 4.1 Common supports for Old Age Allowance programme 52 Figure 4.2 Common supports, Agriculture Rehabilitation Programme 54

Figure 4.3 Common supports, Allowance for the Widowed, Deserted and Destitute Programme

55

Figure 4.4 Common supports, Stipend for Primary Education Programme 57

Figure 4.5 Common supports, Stipend for Secondary and Higher Education Programme

59

Figure 6.1 Beneficiary selection process for OAA 113 Figure 6.2 Implementation process of OAA 115 Figure 6.3 Beneficiary selection process for AWDD 118 Figure 6.4 Implementation mechanism of AWDD 119 Figure 6.5 Beneficiary selection process of ARP 122 Figure 6.6 Implementation process of ARP 122 Figure 6.7 Beneficiary selection process of PESP 128 Figure 6.8 Implementation process of PESP 129 Figure 6.9 Beneficiary selection process of FSSP 130 Figure 6.10 Implementation process of FSSP 133

xv

List of Appendix Tables

Table No. Title Page Appendix Table 1 Distribution of FGDs 151 Appendix Table 2 List of key informants interviewed 152

xvi

Abbreviations and Acronyms

AARES Australian Agricultural & Resource Economics Society ADB Asian Development Bank ARP Agricultural Rehabilitation Programme ARTEP Army Training and Evaluation Programme ATT Average Impact of the Treatment on the Treated AWDD Allowance for the Widowed, Deserted and Destitute BBS Bangladesh Bureau of Statistics BPC Benefício de Prestacao Continuada BRAC Bangladesh Rural Advancement Committee CGD Center for Global Development CARE Cooperative for Assistance and Relief Everywhere CCT Conditional Cash Transfer CCTP Conditional cash Transfer Programme CFW Cash for Work CGAP Consultative Group to Assist the Poorest CGD Conditional Independence Assumption CIA Conditional Independence Assumption CT-OVC Conditional Transfer-Orphan and Vulnerable Children DECT Dowa Emergency Cash Transfer DFID Department for International Development FAO Food and Agriculture Organization FGD Focus Group Discussion GDP Gross Domestic Product GoB Government of Bangladesh HH Household Head IPEA Institute for Applied Economic Research EA Enumeration Areas EGS Employment Guarantee Scheme EGP e-Government Procurement EOBI Employees Old-Age Benefits Institution EU European Union FAO Food and Agriculture Organization FCND Food Consumption and Nutrition Division FFA Food for Asset Creation FFE Food for Education FFW Food for Work FGD Focus Group Discussions FMRSP Food Management and Research Support Project FPMU Food Planning and Monitoring Unit FSSAP Female Secondary School Assistance Programme FSSP Female Secondary School Stipend Programme

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FSVGD Food Security Vulnerable Group Development FY Financial Year FFYP Fifth Five Year Plan GDP Gross Domestic Product GOB Government of Bangladesh GOM Government of Maharashtra GTI Graduate Training Institute BAU Bangladesh Agricultural University HBL-NRSP Habib Bank Limited-National Rural Support Programme HIES Household Income and Expenditure Survey ICDS Integrated Child Development Scheme ICRISAT International Crops Research Institute for the Semi Arid Tropics IDB Inter-American Development Bank IFPRI International Food Policy Research Institute IFS Integrated Food Security IGVGD Income Generating Vulnerable Group development IMPS Integrated Multipurpose Sample IPEA Instituto de Pesquisa Econômica Aplicada ISBN Brooks World Poverty Institute IZA Institute for the Study of Labour KIIs Key Informant Interview LGD Local Government Division MCHT Ministry of Chittagong Hill Tracts MDM Mid-Day Meal MDRC Opportunity NYC-Family Rewards Programme. MDRC MDS Ministério do Desenvolvimento Social e Combate à Fome MOA Ministry of Agriculture MOF Ministry of Finance MOFDM Ministry of Food and Disaster Management MOLGD Ministry of Local Government and Decentralization MOPMED Ministry of Primary and Mass Education Department MOWCA Ministry of Women and Children Affairs MPRA Munich Personal RePEc Archive MOSW Ministry of Social Welfare MWR Ministry of Water Resource NAFTA North American Free Trade Agreement NFPCSP National Food Policy Capacity Strengthening Programme NGO Non Government Organization NNM Nearest Neighbor Matching NPC National Planning Commission of Nepal OAA Old Age Allowance OECD Organisation for Economic Co-operation and Development OMS Open Market Sales

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PDS Public Distribution System PES Primary Education Stipend PKSF Palli Karma-Sahayak Foundation PLDP Participatory Livestock Development Project PROCAMPO Programme for Direct Assistance in Agriculture PS Propensity scores PSM Propensity Score Matching PSU Primary Sampling Unit OFSP Other Food Security Programme RCT Randomized Control Trials RD Rural Development RGS Research Grants Scheme RMP Rural Maintenance Programme RPS Red de Proteccion Social SCF Sector Commanders Forum SCT Social Cash Transfer SDF Social Development Foundation SMA Small Metropolitan Areas SNAP Supplemental Nutrition Assistance Programme SOUHARDO Strengthening Household Ability to Respond to Development Opportunities SPE Stipend for Primary Education SSA Social Security Allowance SSC Secondary School Certificate SSHE Stipend for Secondary and Higher Education SSNP Social Safety Net Programme TR Test relief TAT Technical Assistance Team TUP Targeting Ultra Poor ToR Terms of Reference UN United Nations UNICEF United Nations Children`s Fund USAID United States Agency for International Development USDA United States Department of Agriculture UTC Coordinated Universal Time VGD Vulnerable Group Development VGF Vulnerable Group Feeding WB World Bank WFP World Food Programme

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Chapter 1

Introduction

1.1 Background of the Study

The most crucial challenge threatening Bangladesh is elimination of widespread poverty. Poverty reduction in Bangladesh has been significant but modest since the 1990s. National poverty head count rate declined from 56.6 percent in 1991-92 to 31.5 percent in 2010, while extreme poverty rate declined from 41 percent in 1991-92 to 17.6 percent in 2010 (6th FYP, 2012). Despite poverty rate declining by 1.7 percent per annum at national level, 31.5 percent of households in the country were living in poverty in 2010 (HIES, 2010). Therefore, till now one of the main agenda of the government of Bangladesh is reduction of poverty. Like many other developing countries, social safety net programmes (SSNPs) in Bangladesh can play a vital role in reducing poverty. SSNPs are non-contributory transfer programmes designed and implemented for the poor and the vulnerable groups of the society. SSNPs can be provided by the public sector (government and aid donors) or by the private sector (NGOs). During last several decades many countries in the world implemented a variety of such programmes to serve the vulnerable and underserved people as means of `protection as well as `promotion`. SSNPs in Bangladesh are more than a necessary element in fighting poverty as an increasing number of population is being added extreme poverty category. Due to the high incidence of shocks and the large vulnerable population, the government of Bangladesh has raised safety net expenditures steadily since the mid 1990s, but programme benefits are still extremely inadequate.

1.2 An Overview of Social Safety Net Programmes in Bangladesh

Safety net spending was around 15 percent of the government expenditure in Bangladesh in 2010 (Barkat et al., 2011). About 24.6 percent of households received benefit from the SSNPs in 2010 (HIES, 2010). These programmes directly transfer resources to poor people. Bangladesh has a comprehensive portfolio of both food and cash-based SSNPs. Currently, there are about 99 such programmes (the number varies from source to source). The safety net programmes can be categorized in accordance with the specific objective that each programme is designed to achieve. For example, programmes may be designed to develop infrastructure, provide education incentives to the poor student, ease disaster consequences, or provide livelihood support to disadvantaged groups such as the widowed, deserted and destitute, aged and the disabled. They can be categorized in other ways. In Table 1.1 we present the major types of SSNPs in Bangladesh.

There are 30 public SSNPs in the country covered in the HIES 2010. From these SSNPs this study considers interventions such as (1) old age allowance (OAA), (2) allowances for the widowed, destitute and deserted (AWDD), (3) agriculture rehabilitation programme (ARP),

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(4) stipend for primary students (5) stipend for secondary students and (6) a combination of cash for work (CFW), vulnerable group development (VGD), food for work (FFW) and 100 days employment scheme. Of thirty SSNPs, 5 are conditional cash transfer, 10 are unconditional cash transfer, 9 are public works or training based cash or in kind transfer programme and remaining 6 are emergency or seasonal relief programmes (HIES, 2010). An overview of the selected safety net programmes in this study are presented in Table 1.2.

Table 1.1: Major types of SSNPs in Bangladesh Types Name of the SSNPs

Cash Transfer Old age allowances (OAA) (implemented by the Ministry of Social Welfare)

Allowances for the widowed, deserted and destitute (AWDD) Allowance for the financially insolvent disabled Maternity allowances programme for the poor lactating Honorarium for insolvent freedom fighters (implemented by

MOFWA) Honorarium for injured freedom fighters Allowances for distressed cultural personalities/activities Allowances for beneficiaries in Ctg. hill tract area Housing support Maternal health voucher allowance

Conditional Cash Transfer

Stipend for primary students (implemented by MOPMED) Stipend for drop out students Stipend for secondary and higher secondary /female students Stipend for disabled student (MOSW) Grants for the schools of disabled (MOSW)

Public works or training based cash or in kind transfer

Food for works (FFW) Cash for work (CFW) (implemented by MOFDM) Agriculture rehabilitation programme (ARP) (implemented by MOA) Vulnerable group development (VGD) (implemented by MOWCA) Employment generation programme (EGP) for hard-core poor or 100

days Rural employment, social forestation and rural maintenance

programme (implemented by LGD) School feeding programme (MOPMED) Rural employment opportunity for protection of public Char livelihood

Emergency or seasonal relief

Gratuitous relief (cash) (GR) General relief activities Food assistance in CTG-Hill tracts area Subsidy for open market sales (OMS) Vulnerable group feeding (VGF) (implemented by MOFDM) Test relief (TR)

Source: HIES, 2010

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In developing countries like Bangladesh, where most of the poor reside in rural areas and receive a large share of their incomes from agriculture, agricultural development could be a foremost weapon to reduce poverty. One of the SSNPs that is directly linked with agriculture is the agriculture rehabilitation programme. This programme is designed to rehabilitate the small and marginal farmers’ and provide them agricultural inputs such as seeds, fertilizers and farm machineries (power tillers, threshers, batch driers, irrigation pumps etc.) through Directorate of Agricultural Extension (DAE). Also, capacity building of farmers and the development of community based farmers organizations are included in the programme.

Table 1.2 shows the coverage of selected safety net programmes and budgetary allocation in the programmes for the years 2009-10 through 2012-2013. The budget accounting shows allocations for ‘social safety nets’ for selected safety net programmes. In FY 2012-13, Tk. 891 billion, Tk. 331.20 million, Tk.806.84 million, Tk.1439.04 million, Tk.1200.00 million, Tk.52.10 million, Tk.949.00 million and Tk.565 million were allocated for selected safety net programmes such as Old Age Allowance (OAA), Allowance for the Widowed, Deserted and Destitute (AWDD), Cash for Work (CFW), Vulnerable Group Development (VGD), Food for Work (FFW), Agriculture Rehabilitation (AR), Stipend for Primary Students and Stipend for Secondary and Higher Secondary/Female Student, respectively.

The salient features and more detailed overview of the SSNPs of this study are presented in Table 1.3. Launched in 1998, OAA programme has expanded considerably, benefitting about 2.5 million older people. The programme targets poor elderly individuals who are at least 65 years of age (62 years for female), have an income of less than Tk. 3000/year and have not worked in the formal sector. The beneficiaries get Tk. 300/month from the programme. The selection criteria ensures that 50 percent of the beneficiaries are women.

The VGD programme exclusively targets poor women and provides a monthly food ration for 24 months. Although it was introduced as a relief programme in the mid-1970s, it has evolved over time to integrate food security with development objectives. The development package includes training on income-generating activities and awareness-raising for social, legal, health, and nutrition issues; and basic literacy and innumeracy.

The 100-days EGP is a positive and people-oriented programme aimed at helping the extremely poor and unemployed people. In view of this, the programme is definitely a positive one as it will help these people earn some money to sustain and contribute to the reconstruction of roads and other works. The most important thing is that the people involved in the programme will regain self-confidence and the strength to continue to struggle for survival. Each of the beneficiaries gets Tk. 100 a day for work under the scheme. Registered unemployed people have been issued cards after enlisting. If the registered unemployed people cannot be given an appropriate job within 15 days after issuance of cards, they will get unemployment allowance. In such cases, they get Tk. 40 each daily for first 30 days and Tk. 50 daily for the rest of the period and the programme will last up to 100 days.

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Stipend for primary students and stipend for secondary and higher secondary female students are under cash for education programme. Cash for education programme was named as a food for education programme until 2002. At that time this programme distributed monthly foodgrain rations to the households below poverty if they sent their children to primary schools. This SSNP terminated in 2002 and has been replaced by the Primary Education Stipend (PES) programme. Now the objectives of this PES are to increase enrolment from poor families, reduce dropout, increase rate of completion, control child labour and raise quality of primary education. Government provide Tk. 100 if one student in the Household, Tk. 125 if more than one student in the household. However, this payment is made to mothers’ bank accounts. The Government of Bangladesh also provide cash assistance to girls in secondary schools through the female secondary school assistance programme (FSSAP). The objectives of FSSAP are to increase the number of girl students in secondary schools, increase employment and self-employment among women and reduce underage marriage. Government provides monthly stipend ranging from Tk. 150 (class VI), Tk. 180 (class VII), Tk. 210 (class VIII) to Tk. 360 (class IX and X) along with free tuition (Tk. 60 to 120), book allowance (Tk. 250 for class IX and X) and exempted examination fees (Tk. 550 for SSC student) (Selim, 2009). However, the programme was redesigned in 2008 and renamed as the secondary education access and quality enhance programme, which includes boys from poor families as well as girls.

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Table 1.2: Coverage of selected safety net programmes and budgetary allocation from 2009-10 to 2012-2013 Programme Coverage in million (no.) Budget in million (Tk.)

2009-10 2010-11 2011-12 2012-13 2009-10 2010-11 2011-12 2012-13 Old Age Allowance (OAA) 22.50 24.75 24.75 24.75 810.00 891.00 892.04 891.00 Allowance for the Widowed, Deserted and Destitute (AWDD)

9.20 9.20 9.20 9.20 331.20 331.20 331.20 331.20

Vulnerable Group Development (VGD)

88.33 (person-month)

88.33 (person-month)

88.33 (person-month)

90.00 (person-month)

595.17

729.92

781.02

806.84

Food for Work (FFW) 35.71 38.10 40.0 50.00 927.66 1294.00 1283.70 1439.04 Employment Generation for Hard-core Poor or 100 days EGP

45.00 42.00 42.00 45.00 1076.11 1000.00 1000.00 1200.00

Agriculture Rehabilitation 25.00 25.00 25.00 25.00 50.00 50.00 52.07 52.10 Stipend for Primary Students 52.00 78.17 79.95 84.30 574.84 865.00 900.00 949.00 Stipend for Secondary and Higher Secondary/Female Student

25.00 38.92 37.41 33.01 478.79 672.89 640.29 565.00

Source: Ministry of Finance (2012)

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Table 1.3: An overview of selected safety net programmes No. Name of the

Programme Year of Starting Allocation Selection Criteria Benefit

1. Old age allowance

1998 Tk. 891 crore in the financial year 2011-2012.

i) Must have the age of 65 and above. After attaining 62 years a woman is eligible for getting the same allowance. ii) Average annual income must below Tk.3000

Total Beneficiary of this is 2.475 million. Beneficiaries are getting Tk. 300 per month per head which is payable in every 3 months. Monthly allowance of Tk. 300, no time limit. Considering average life expectancy, total support per beneficiary may amount to Tk. 18,000 on the assumption of 5 years of programme support.

2. Allowances for the widowed, destitute and deserted women

In 1998 under the Ministry of Social Welfare

Tk. 331.20 crore in the 2011-2012 fiscal years.

i. Allowance recipient must be the citizen of Bangladesh.

ii. Priority must be given to the widow, divorced women, husband deserted women.

iii. Priority must be given to the wealth less, homeless and landless, respectively.

Total beneficiaries are 9 lac 20 thousand. Recipients get Tk. 300 monthly payable in every three months.

3. Cash for work (CFW)

2001 In 2009 total distribution was Tk. 4,43,15,400.

Targets vulnerable groups (including HIV-affected households and women) affected by high food prices and natural disasters. Those who are unable to work, e.g., they could be given cash grants or vouchers instead of CFW; or they may

Households are provided with employment opportunities to give them cash to meet their basic needs and improve their livelihoods. It is often implemented together with a range of other cash interventions (cash grants and vouchers), food aid, and food-security interventions or livelihoods interventions (to support livestock rearing, fishing, and agriculture).

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be permitted to nominate someone to work on their behalf; or light work might be offered to them.

4. VGD (i) Income generating VGD (IGVGD) and (ii) Food security VGD (FSVGD).

The starting year of VGD 1975. The Ministry of Women and Children Affairs is implementing this programme.

Allocation of food grains 2.65 metric tonnes in the 2010-2011 fiscal years.

Less than 15 decimals of land VGD aims to reach ultra-poor rural women with complementary inputs that will improve their nutrition and enhance their livelihoods and self-reliance.

7.5 lac distressed and ultra-poor women have been receiving food assistance and training. 25 kilogram of Atta (flour) per month. For a programme cycle of 24 months (approximate total money value of Tk. 15,000 per beneficiary) In the IGVGD component, beneficiaries received a monthly ration of 30 kilograms of wheat or 25 kilograms of fortified flour (Atta) and in the FSVGD programme, beneficiaries receive 15 kilograms Atta and Tk. 150 per month. Over 24 months, the VGD assistance package includes: - fortified wheat flour or rice to offset the opportunity costs of participating in training programmes and to improve nutrition; - training in health and nutrition, civil and legal rights, literacy and numeracy, HIV awareness and prevention measures, child trafficking, budget management, and income-generating activities;

5. Food for work Launched in 1974 under the Ministry of Food and Disaster Management

Allocation of food grain 3.54 lac tons equivalent to Tk. 890.79 crore in the 2010-2011 fiscal years.

Food grains are distributed as wage payment to workers in labour-intensive public works programmes.

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6. 100-day employment generation programme

September 2008 Tk. 2000 crore for 2 million people.

The poorest and jobless poor.

To increase the purchasing power of extreme poor rural people, create wealth both for the people and the nation and to develop and maintain small scale rural infrastructure and communication system by providing employment to extreme poor rural unemployed people.

7. Agriculture rehabilitation programme

For the FY 2009/10 Tk. 550.0 million*

- Provide seeds and other agricultural inputs, as well as fishing nets and supplies.

8. Stipend for primary students

January 2003 Implemented by the Ministry of Primary and Mass Education

During 2008-2013 Tk 2.44 billion (about US$37 million) for 4.8 million children.

i. Belong to a landless or near landless household (one that owns less than half an acre of land)

ii. Have parents who work as day labourers

iii. Belong to a female-headed household (one where the head is widowed, separated, or divorced or where the husband is disabled)

iv. Belong to a household that derives its living from fishing, pottery, weaving, blacksmithing, or cobbling)

v. Belong to a household that derives its living from

vi. Sharecropping vii. Households with

Supporting more than 5 million pupils. Tk. 100 per month for one child (about US$1.76) and Tk 125 per month for more than one child.

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qualifying pupils must attend school 85 percent of the time

9. Stipend for secondary students

Began as an experiment in 1982 by a local NGO in a single Upazila with USAID financial assistance under the supervision of the Asia Foundation.

FY 2009/10 Tk. 3390 million*

To be eligible for a stipend a girl must a) Attend school for at least 75 percent of the days of the school year b) achieve at least 45 percent marks on her evaluations and examinations and c) remains unmarried.

Provides free tuition, yearly book allowance, and public examination fees and stipends to all eligible female secondary school students enrolled in recognized institutions outside the metropolitan areas. The rate of the stipend varies from Tk. 150/month - Tk. 360/month based on the class of study.

Source: Bangladesh Economic Review, 2011

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1.3 Broad Research Objectives

The objectives of this research project are:

a. To document potential productive impacts of selected public safety nets at the household and community levels and the possible incentive framework behind those results at the two levels

b. To identify successful examples of government and NGO safety net interventions which foster productive outcomes

c. To draw implications for the design and implementation of SSN in Bangladesh and for complementarities among government agencies interventions

1.4 Key Research Questions, Hypotheses, and Underlying Assumptions

The hypotheses, research questions and underlying assumptions are presented in Table 1.4.

Table 1.4: Research framework: hypotheses, research questions and underlying assumptions Hypothesis Research questions Underlying assumptions Household level:

Social safety net interventions either cash or kind (conditional, unconditional, public works) may facilitate significant changes in income generating activities, labour allocation, accumulation of productive assets and productive investments of beneficiary household than non-beneficiary households.

What are the productive outcomes of selected public safety nets at the household level? Sub-questions:

What are the impacts of SSNP on labour allocation?

Can SSNP beneficiaries use the SSN supports to productive investment?

How does the SSNPs fund affect beneficiaries’ income generating activities?

What is the effect on detrimental risk coping strategies, such as distress sales of productive assets, school dropout and child labour?

What are the impacts of SSNPs on human capital?

Beneficiaries are able to use SSNP funds as working capital

Beneficiary households are not intrinsically risk averse – i.e. they are open to taking greater risks with SSNP funds given the opportunity

Beneficiaries have access to regular SSNP supports

Local economy level:

The community will benefit economically from social safety nets interventions

What are the productive outcomes of selected public safety nets at the community level? Sub-questions are:

The aggregate injection of SSNP support into the local economy is

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through multiplier effects on local goods and labour markets.

What are the impacts at the local goods market?

What are the impacts at local labour market?

What are the multiplier effects of SSNPs?

As various different community-level impacts might occur at the same time, are there some who are winners and some who are losers, and if so who and why?

sufficiently high as to make a significant impact on goods and labour markets

The other research questions of this study are as follows:

i) What are the evidences of similar programme and intervention at the government and non-government levels in Bangladesh and in the region?

ii) What are the successful examples of government safety nets interventions which foster productive outcomes?

iii) What are the successful examples of NGO safety nets interventions which foster productive outcomes?

iv) What are the recommendations for adjustment and actions? and What would be the alternative coordination/integration mechanism at the local and central level?

1.5 Link between Research Questions and Output

The research outcomes, research question and the modes of answering research questions are described together below in Table 1.5.

Table 1.5: Research outputs, research questions and mode of answering Outputs Research questions Mode of answering2 a) Evidences on the productive outcomes of selected public safety nets at the households and community levels; evidence whether productive outcomes differ between male and female to the extent possible

1) What are the productive outcomes of selected public safety nets at the household level?

HIES 2010 data

2) What are the productive outcomes of selected public safety nets at the community level?

Qualitative field survey data at community level Qualitative field survey data at community level

b) A complete review of similar programme and intervention at the government and non-government levels in Bangladesh and in the

3) What are the evidences of similar programme and intervention at the government and non-government levels in Bangladesh and in the

Literature (books, journal articles, working papers, discussions papers, academic theses, government documents, other grey literature and major databases etc.) review

2 The details of the methodology and models are described in the methodology section

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region region? c) Identified successful examples of government and NGO safety nets interventions which foster productive outcomes

4) What are the successful examples of government safety nets interventions which foster productive outcomes?

Literature (books, journal articles, working papers, discussions papers, academic theses, government documents, other grey literature and major databases etc.) review

Programme-impact matrix (SSN-Impact Matrix) will be developed

FGDs and KIIs

5) What are the successful examples of NGO safety nets interventions which foster productive outcomes?

Literature review

SSN-Impact Matrix will be developed

FGDs and KIIs

d) Recommendation on the adjustments and actions

6) What are the recommendations for adjustment and actions?

Impact results Literature and programme review

(SSN-IMPACT matrix); FGDs and KIIs

e) Identified alternative coordination/integration mechanism

7) What would be the alternative coordination/ integration mechanism at the local level?

Impact results Literature and programme review

(SSN-IMPACT matrix); FGDs and KIIs

8) What would be the alternative coordination/ integration mechanism at the central level?

Impact results Literature and programme review

(SSN-IMPACT Matrix); FGDs and KIIs

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Chapter 2

Literature Review

2.1 Introduction

Safety net came first into the discourse during the 1980’s in response to the (presumably short-term) adverse effects of structural adjustment (Adato et al., 2004). The concept was later popularized in East Asia during the financial crisis (Paitoonpong et al., 2008). During the last several decades many countries in the world have implemented social safety net programmes (SSNPs) to serve the vulnerable and underserved peoples as a means of ‘protection’ but also as ‘promotion’. Early proponents of SSNPs consider it as an instrument of equality. From experience it has been learned that SSNPs play both redistributive and productive roles. Given their importance and implications to the protection of the under deserved, SSNPs always get considerable attention to the researchers, development practitioners, academicians, and policy makers. This section provides a review of literature on the productive roles of the SSNPs and has identified what the formidable gaps are and how the present study will contribute to the existing literature.

2.2 Social Safety Nets - Around the Globe

Numerous studies have been undertaken across the globe to analyze the impact of safety net programmes. Recent studies are giving more attention to identify the productive roles of SSNPs (Alderman and Yemtsov, 2012).

There are different forms of social safety nets around the globe. All countries deploy some forms of public measure against hunger. For example, vouchers and cash transfers are implemented as social safety nets in both developing and high-income countries. In the United States, about 25 million people, or one-twelfth of the population benefit from the national food voucher programme, called the Supplemental Nutrition Assistance Programme (SNAP). SNAP is the largest voucher programme in the world, with a budget of about US$37.5 billion/year (USDA, 2007). Mexico’s PROGRESA-Oportunidades is a famous and successful conditional cash transfer programme (Miller et al., 2009). Middle-East countries have extensive experience with safety nets in the form of consumer price subsidy programmes, particularly food-based ones (Alderman, 2002). In Europe, countries such as Italy protected the poor from the financial crunch by distributing targeted vouchers for use in supermarkets and other outlets. However, there are marked differences between these programmes and those in developing countries. In high-income countries, social protection is an institutionalized feature of a social contract between the State and citizens. In contrast, social protection in developing countries is not really an institutionalized system. As a result, informal arrangements often bear the burden of social protection (Morduch and Sharma, 2002).

Like many other developing countries, Bangladesh government has long standing history of implementing safety net programme. In the revised budget of 2012-13, the government of

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Bangladesh allocated Tk. 227505.52 million under Social Protection and Empowerment which was 11.87 percent of the total budget and equivalent to 2.18 percent of the GDP. The revised budget is divided into two major categories namely, (i) social protection -74.4 percent and (ii) social empowerment - 25.6 percent of the total safety net budget. The allocation was 16.07 percent and 13.63 percent, respectively in the revised budget of the FY 2010-11 and FY 2011-12 (MOF, 2012).

There are different forms of social protection such as formal and informal. Informal social protection includes sharing and insurance mechanisms within and among communities, such as the Hawala systems in Muslim countries3. Formal arrangements can be either public - provided by the government – or private, provided by actors operating on markets. Public measures can be funded domestically or externally, by donors or international agencies. Safety nets usually fall into this category. Private mechanisms are mainly insurance products available on markets, such as health insurance. Developing countries tend to have large informal social protection systems and some formal public safety nets, mostly funded by donors. Advanced economies tend to have large formal social protection systems, both public and private, and few informal arrangements.

In general, countries with limited capacities are chronically food-insecure with high poverty and malnutrition rates, fragile ecosystems and extremely limited fiscal space. Two core sets of countries can be identified, based on their underlying stability. First are post conflict and highly fragile countries; here most social protection is provided through donor-funded safety nets, often in the form of large humanitarian responses to recurrent emergencies. Examples include Liberia, Somalia, the Sudan, Haiti and Afghanistan (Harvey, 2009; Save the Children, Oxfam and CARE, 2009; Government of Afghanistan, 2008). Second are more stable countries that are laying the basis for longer-term social protection systems. In these contexts – such as in Ethiopia, Malawi, Kenya, Nicaragua, Cambodia and Bangladesh – markets may allow a wider use of cash-based safety nets, and some insurance products might also appear (Government of Malawi, 2007; Regalia and Castro, 2007). Countries with emerging systems are those where social protection has begun to be institutionalized. These include transitional economies, fast-growing Asian countries, and most Near Eastern and Latin American (e.g. China, India, Indonesia, Mexico, Brazil, South Africa and Egypt). In these countries, international assistance has a more limited role, and systems are largely domestically funded4.

2.3 Productive Outcomes of SSNPs at Household Level

The literature most pertinent to the present study can be discussed based on the productive outcomes of SSNPs at (i) household level and (ii) community level. In the following section

3 See http://en.wikipedia.org/wiki/Hawala. 4 In countries such as China, India, Indonesia, Mexico and Brazil, the percentage of aid in national gross capital formation is less than 1 percent; in South Africa and Egypt it is less than 5 percent; and in CIS countries such as Armenia and Georgia it is about 10 percent (World Bank, 2009).

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studies, which identified mainly productive outcomes of SSNPs at household level both at national and global level are briefly described.

2.3.1 Social Safety Nets: Global Perspective

Devereux (2002) argued that social safety nets can be conceptualized as publicly funded transfer programmes with ‘consumption smoothing’, rather than ‘mean shifting’, objectives. The study highlighted distinctions between three determinants of poverty - low labour productivity, vulnerability, and dependency. The study also distinguished two kinds of anti-poverty interventions such as livelihood promotion and livelihood protection. Within this framework, the study found that even tiny income transfers are often invested in income-generating activities, education, or the acquisition of productive assets, suggesting that social safety nets can play a significant role in reducing chronic poverty. Morduch and Sharma (2002) described the ways of building public safety nets to complement and extend informal and private institutions. They stated that most effective policies will combine transfer systems that are sensitive to existing mechanisms with new institutions for providing insurance and credit and for generating savings. However, the study did not evaluate the impact neither at household nor at community level. Sumarto et al. (2004) assessed the impact of several Indonesian social safety net programmes on household welfare and poverty dynamics utilizing a panel data set of over 10 thousand households. The impact of participation in the social safety net programmes on household consumption was found to be generally positive as expected. However, only the subsidized rice programme appeared to have significantly reduced the risk of poverty among participating households.

Del Ninno and Dorosh (2003) assessed the merits of food and cash transfers using the propensity score matching and found that the marginal propensity to consume for wheat is essentially zero for food for work and 0.51 for food for education. The authors also found that total marginal propensity to consume wheat out of small wheat transfer to poor households is approximately 0.25 while MPC for wheat out of cash transfer is zero. Sadoulet et al. (2004) explored the role of conditional cash transfer (CCT) programmes in serving as a risk management instrument for the poor. Using various rounds of panel data from the successful CCT PROGRESA programme in Mexico. They found that the programme was able to keep children in school, implying long-term human development from short-term decisions. Due to a number of shocks - such as unemployment or illness of the household head or younger children, droughts, natural disasters in the community and loss of land, harvest, or animals etc., children had to work instead of going to school implying lower school attendance. This had longer term consequences on educational achievements and human capital development. Children were used as risk coping instruments without CCTs. Iidiosyncratic and covariate shocks pushed parents to take children out of school and to use child labour as risk coping instruments. Progresa transfers and the conditionality on school attendance served to deter using child labour as a risk coping strategy. The PROGRESA cash transfers served as safety nets to keep children at school and out of the labour market. So,

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CCT protected children from these shocks, creating an additional benefit from these programmes as effective safety nets with long term benefits of human capital development.

Davies and Davey (2007) analysed the impact on the local economy of an emergency cash transfer programme in rural Malawi. Authors found that there are widespread benefits for regional economy as a whole and for certain groups in particular. Small farmers and small businesses gain particular advantage as this is where poorer households’ purchases are focused; education and health also benefit. Such cash transfer payments can also help to support the regional economy during the most ‘lean’ periods.

Using Propensity Score Matching (PSM) technique, Gilligan and Hoddinott (2008), assessed the impact of Ethiopia’s Productive Safety Net Programme (PSNP), the largest social protection programme in Sub-Saharan Africa outside of South Africa. The programme has little impact on participants on average, due in part to transfer levels that fell far below programme targets. Beneficiary households that received at least half of the intended transfers experienced a significant improvement in food security. Households with access to both the PSNP and packages of agricultural support were more likely to be food secured, to borrow for productive purposes, use improved agricultural technologies, and operate their own nonfarm business activities. However, estimates show that beneficiaries did not experience faster asset growth as a result of the programmes. On the contrary, Hoddinott (2008) found that safety net interventions contributed to agricultural and economic growth through their impact on asset creation, asset protection, resource allocation, and redistribution. Poorly designed or implemented social protection programmes or those with only token funding, are unlikely to meet the intrinsic or instrumental objectives of the social safety net transfers. Well designed and implemented social safety nets interventions can complement pro-poor agricultural investments and thus contribute to longer-term poverty reduction in addition to their short term direct impacts.

Barrientos and Wheeler (2009) examined local economy effects of social transfers, by focusing on food consumption and asset holdings of non-eligible households in rural Mexico following the introduction of PROGRESA in 1997. They found that non-eligible households in treatment areas showed significantly higher levels of food consumption and asset holdings following the introduction of PROGRESA, compared to non-eligible households in control areas. Transfers in poor rural areas in Mexico enable agents to interact more strategically such that non-beneficiaries, as well as beneficiaries, reap consumption and production advantages. Svarch (2009) explored the potential influence of access to a CCT programme on credit market outcomes. Using fixed effects and instrumental variables methods and household panel data from participants in the PROGRESA/Oportunidades CCTP in Mexico and non-participant control households the author argued that participation in the programme increased the likelihood of participation in credit markets. The increased participation in credit markets is a potential contribution of the CCTP to the breadth of outreach of finance in Mexico. Obtained results reflected the behavior of urban households, as there were no credit market data for the rural households and because of the conflicting effects, they cannot be generalized.

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Erin et al. (2010) explored whether cash transfer programmes conditioned on human capital outcomes can influence agricultural production. The programme is found to increase the value and variety of food consumed from own production and to increase land use, livestock ownership and crop spending. Impact estimates are found to differ across land use categories and PROCAMPO participation. Their obtained results support the hypothesis that transfers influence agricultural production and impacts are greater for households invested in agriculture.

Using household panel data from a randomized community-based intervention carried out in both coffee - and non-coffee-growing areas, Maluccio (2005) examined the role of a conditional cash transfer programme, the Red de Proteccion Social (RPS), during this downturn. Beneficiaries who participated in the coffee industry as labourers before the programme were more likely to have exited the coffee industry, whereas those who participated as producers were less likely to have exited. Their findings are consistent with the existence of credit constraints inhibiting such transitions in the absence of the programme. Soares et al. (2010) presents impacts of the pilot conditional cash transfer programme in Paraguay. The choice of outcomes of interest is based on the work developed by the family counseling component undertaken by social workers. Propensity score techniques were used to deal with the problem of non-random treatment assignment. They found `Tekopora` has had a positive effect on investment in agriculture, savings, and on the possession of identity card, but did not have much impact on access to credit and on social participation. They conclude that conditional cash transfer programmes can have impacts that go beyond the usual impacts on consumption, and health and education outcomes.

Garcia and Hill (2010) estimated impact of conditional cash transfers (Familias en Accion) on children’s school achievement in Colombia. The programme has a positive effect on school achievement for children aged seven to 12 living in rural areas. The study found a negative effect on the school achievement of adolescents, particularly those living in rural areas. Maluccio (2010) examines the impact of a Nicaraguan conditional cash transfer programme on measures of expenditures and productive investment. Despite clear evidence from a randomized evaluation that the programme increased current expenditures, there is little evidence that it increased agricultural or non-agricultural investment. An estimated marginal propensity to consume out of the transfers of nearly one, combined with no effect of cumulative past transfers on current consumption, corroborate direct evidence on investment. In contrast to gain made in human capital investment, the potential for long term increases in consumption as a result of other forms of increased investment may be limited.

Independent Evaluation Group of the World Bank (2011) found that the evidence on the impacts of social safety nets accumulated through impact evaluations over the last decade provides lessons for developing effective programmes in the future. In the short term, safety nets for which there is enough evidence are found to improve immediate consumption, current economic activities, households’ investments in human capital, and abilities to mitigate the negative effects of shocks.

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Fiszbein (2011) described various experiences with conditional cash transfers (CCTs), to distil lessons about their effectiveness as crisis-response programmes for households with children, to identify design features that can facilitate their ability to respond to transient poverty shocks, and to assess how they can complement other safety-net programmes. They argued that investments in cash-transfer systems can pay off, and countries can make productive investments now in systems that will leave them better prepared for the next crisis. Cash transfers are only part of the solution. As household data become available, it will be critical to analyse the distributional impact of these policy changes, assess the implications for the long-term sustainability of safety nets, & identify lessons for the future.

Grosh et al. (2010) drawing on a wealth of research, policy, and operational documents from both academia and the World Bank’s work in over 100 countries, provides pragmatic and informed guidance on how to design and implement safety nets, including useful information on how to define eligibility and select beneficiaries, set and pay benefits, and monitor and evaluate programmes and systems. Two most important areas that the book emphasized are the basic concepts of targeting and results of targeting which discussed the possible gains from targeting, cost of targeting, targeting errors, errors of inclusion and exclusion errors. Amare and Asfaw (2012) evaluated the impact of food aid (food-for-work and free food distribution) on rural poverty in Ethiopia. Using household panel survey data, they estimate causal impacts using difference-in-difference matching methods and endogenous switching regression. They found that while participation in both types of food aid programmes reduces the incidence of poverty, although their impact is not equal. Participation in food-for-work did not contribute to reducing the poverty gap and distribution among the poor, while free food distribution is effective in reducing all poverty measures. The study finds a heterogeneous impact of food aid on poverty across gender.

Suwanrada and Wesumperuma (2012) examined the development of the OAA (or social pensions) system in Thailand from a means-tested system to universal coverage, discussing some of the main challenges and implications for policy and practice. It is based on a desk review of academic literature, official documents and statistical data, interviews with policy makers and experts, and focus groups in two communities. The universal system has helped to remove some drawbacks associated with means testing, including favoritism in selecting beneficiaries and difficulty in determining eligibility. Some of the challenges facing the new system include ensuring financial sustainability, strengthening administrative capacity, preventing corruption, and creating a consolidated social security framework. Long and Wesumperuma (2012) examines the social pension scheme in Viet Nam, focusing on a number of operational features, including benefits, coverage, and targeting, as well as financing and affordability. Based on findings from qualitative assessments in three rural communities, conversational interviews with policy makers, and reviews of programme documents and academic literature, they observed that the social pension scheme has helped recipients cope with poverty and risks. They also highlight some of the main challenges to expanding and scaling up the current scheme. Social pensions can have a significant impact on poverty reduction in Vietnam. With similar costs, they argues in favor of providing lower

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benefits to a larger number of beneficiaries, rather than providing more generous benefits to a smaller number of beneficiaries.

Samson (2012) reviewed and analyzed implementation of Nepal’s senior citizens’ allowance. Employing several methodologies, including a review of existing literature, focus group discussions with beneficiaries, and quantitative analysis of Nepal living standard survey and fiscal data from Ministry of Finance, they argued that the senior citizens’ allowance effectively tackles poverty and vulnerability, raises the status of older people, and contributes to a range of developmental outcomes in poor households. The benefits are well targeted and are provided through transparent registration and delivery systems, despite many challenges. Their findings demonstrate that a right-based universal approach can succeed in a low-income country context.

Considering border regional view, the Latin American countries, being the center of highest number of safety net and social protection programmes, introduced a set of highly innovative, domestically designed poverty and vulnerability reduction SSN programmes by the mid 1990’s of which the noted programmes are - Bolsa Escola/Familia (Brazil), PROGRESA/ OPORTUNIDADESA (Mexico) and Chile Solidario (Chile). These programmes have mobilized regional and global interest in social protection policies (Barrientos and Hulme, 2008). In Central America most of the countries also have a good number of social security programmes that covers the risk of illness, disability, old age, and death. Marques (2003) identified social protection measures including early childhood development, school welfare programmes, housing subsidies, income support programmes, schools vouchers, student transportation and scholarships, micro-credit/disaster management subsidies (land fund, housing, school transport, electricity), conditional transfers to families with infants and school age children, conditional cash transfer programme.

2.3.2 Social Safety Nets: National, GO and NGO Literature

Matin and Hulme (2003) mentioned that programme such as income generating VGD, which has goals of livelihood protection and promotion should be a major focus for anti-poverty strategies because this programme had widened the outreach of its poverty reduction activities. Their detailed local-level fieldwork revealed, however, that programme practice differed markedly from programme plans. This is found to have important implications for both future programme design and the understanding of ‘who` does not benefit from such innovative programmes. They conclude that while such programmes, mixing livelihood protection and promotion, should be a major focus for anti-poverty strategies there will remain a role for more traditional social welfare schemes. Ahmed et al. (2007) examined relative efficacy of food and cash transfers in improving food security and livelihoods of the ultra-poor in Bangladesh with a focus on four interventions, including (i) IGVGD and (ii) Food Security VGD (FSVGD) (iii) Food for Asset-creation (FFA) component of the Integrated Food Security (IFS) programme, and (iv) Rural Maintenance Programme (RMP). Most participants express a preference for the transfer type provided by the programme they are participating -72 percent of IGVGD participants prefer only food; 57 percent of RMP

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participants prefer only cash; and 75 percent of FFA and 48 percent of FSVGD participants prefer a combination of food and cash. No major contravention of programme rules in the beneficiary selection process across the programmes. Literacy training does not seem to be effective. Participation in IGVGD, FSVGD, FFA, and RMP raises household per capita food consumption by 45, 66, 23, and 35 kilocalories (kcal), respectively per person per day per Tk. transferred. Participation by an adult female does not lead to increased caloric intakes by preschool-age children in any of the four programmes. A monthly transfer of 100 Tk. increases household income by a significantly smaller amount for FFA (Tk. 32/month) and RMP households (Tk. 85/month).

In Bangladesh, Ahmed et al. (2009) assessed the operational performance of food or cash transfer delivery, beneficiary preferences for the transfer form, targeting accuracy, impact of programme participation on food security, livelihood and gender related outcomes using propensity score matching approach. Impacts were not uniform, such