33361 World Bank Social Safety Nets Primer Notes 2003 No. 11 What Role for Safety Net Transfers in Very Low Income Countries? In countries where large parts of the population expenditures to achieve other development live in absolute poverty, the need for social safe- goals, (2) choose selective coverage by targeting ty nets may be greatest but the capacity to fund population groups generally accepted as deserv- and administer them can be severely constrained. ing of support, and (3) leverage expenditures by What role can social safety net programs play in focusing on interventions that reduce the very low income countries (VLICs)? impact of risks on households' livelihoods. Three Main Constraints for Program Choices--Some Examples Social Safety Net Programs Some special considerations of certain types of Three major challenges must be faced when decid- interventions apply in the specific context of ing what programs would be feasible in a VLIC: VLICs. Availability of information--The information Cash transfers--Programs such as pensions, required to target social safety net programs-- unemployment insurance and social assistance such as income, household size, age, and land- may not be suitable in the context of VLICs. holdings--is often not available or too costly to Information on income and employment is hard obtain. It may be possible to circumvent this to obtain, a big share of employment is found in constraint by (1) selecting programs that are subsistence farming and informal markets, and self-targeting, (2) using community targeting, the incidence of poverty is so high that the pro- and (3) opting for universal coverage. grams would be unaffordable. There may, how- ever, be scope for limited, highly targeted, cash- Administrative capacity--The capacity to adminis- transfer programs for, say, groups with a high ter complex programs tends to be very limited in incidence of poverty and that are generally VLICs. Policymakers should consider (1) choos- accepted as deserving support. ing fewer and simpler program designs, consis- tent with the available capacity, rather than Public works are a self-targeting intervention many or complex programs, (2) using the that can be particularly attractive in informa- administrative systems in place rather than cre- tion- and capacity- constrained countries. They ating additional ones, and (3) using in-commu- have the advantage of creating productive assets, nity groups to target the benefits (within well- but the disadvantages of being managerially defined guidelines). complex and a relatively expensive way to make transfers. In order to target the poorest success- Affordability--Public spending is understandably fully through public works, it is crucial that the very low in such countries and subject to many offered wage rate be determined correctly and competing claims for essential development set below the prevailing market wage rate for investments. Alternative approaches to the unskilled labor. The most common public works funding constraint can be to (1) use safety net programs in VLICs are food-for-work programs. Christine Weigand prepared this note based on Smith, William J. and Subbarao, Kalanidhi. 2003. "What Role for Safety Net Transfers in Very Low Income Countries?" Social Protection Discussion Paper No. 0301. The World Bank. Washington, D.C. Food and nutrition programs--Untargeted food- port while encouraging children's attendance transfer programs generally prove to be fiscally in school or their use of health services. unsustainable, and many countries have moved · Be selective with pure transfers. Try to identi- to more targeted programs. In general, it may be fy a sub-group of the ultra-poor or very dis- preferable to restrict untargeted food transfers to tinct groups that everyone can agree deserve emergency situations or to use them to smooth support, such as orphans or the disabled. As consumption in countries with large seasonal well as limiting the overall cost of the pro- food shortages. gram, this may make it more likely that the program receives enough popular support and School feeding programs in turn tend to suffer will be sustained. from large inclusion errors (because of the diffi- · Judicious timing can optimize the impact of culty of targeting only poor children) and tend transfers: for example, by providing agricul- to be unaffordable if made universal. One possi- tural inputs in the planting period. ble solution is, where possible, to target geo- · `Leverage' spending on safety nets by using graphically. Another is to implement a food-for- limited injections of cash to mitigate crises. As education program that distributes free food to an illustration, a small cash-transfer during poor families whose children attend school regu- times of emergency may be able to keep the larly--a possibly less disruptive and burdensome poor from selling their assets. way of administering a food transfer through the · Choose one or two simple program designs education system. and adhere to them over a sustained period. Agricultural inputs--Programs subsidizing agri- It is absolutely essential to evaluate programs cultural input prices tend to be plagued by large periodically to assess their effects and reform leakages to the non-poor. Distributing small them where necessary. amounts of fertilizer and seed distorts the mar- ket less. Such programs also leverage the Finally, given the need to strike a balance farmer's labor and natural inputs and so have a between investments for growth and transfers `multiplier effect'. ­both compete for scarce public resources--it may be helpful to follow these steps when decid- Some Guiding Principles ing on the type and scope of social safety net Limiting the cost of the programs and the oppor- programs: tunity cost of other investments foregone is one of the key challenges of social safety net programs 1. Re-examine the main constraints to growth in VLICs. While decisions obviously need to be and the role of public investment policy in made on a country-by-country basis, the follow- overcoming these constraints; ing general principles emerge from the analysis: · Use safety net expenditures to fund invest- 2. Conduct a vulnerability assessment and iden- ments that lift longer-run impediments to tify the main risks confronting poor people; growth, such as public works projects (e.g., and roads and irrigation). · Use safety net expenditures that simultane- 3. Identify policy interventions that have a ously contribute to human-capital develop- potential both for reducing vulnerability and ment, such as programs providing food sup- for enhancing growth prospects. The World Bank Social Safety Nets Primer series is intended to provide a practical resource for those engaged in the design and implementation of safety net programs around the world. Readers will find information on good practices for a variety of types of interventions, country con- texts, themes and target groups, as well as current thinking on the role of social safety nets in the broader development agenda. 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