Social Safety Net: High allocations, but off target

Bangladesh is failing to reap the maximum benefit from its high social safety net allocations, which is among the top four in the Asia-Pacific region, for poor targeting and unplanned deployment, found a recent World Bank study.

The government spends more than Bhutan, Pakistan, Sri Lanka, Cambodia, Malaysia, Indonesia, the Philippines, China and others in terms of share of GDP but less than India, Nepal, Maldives and Vietnam, said the report titled 'Bangladesh Social Protection Public Expenditure Review'.

Between fiscals 2013-14 and 2017-18, Bangladesh spent about $18.7 billion on social protection, with the average annual growth in expenditure being more than 25 percent during the years.

The amount is nearly one-tenth of the total budget and about 2.6 percent of GDP in fiscal 2019-20.

"The core issue in Bangladesh, more than the overall resources devoted to social protection, seems to be around how well these resources are deployed," the Washington-based multilateral lender said in the report, which was unveiled yesterday.

Social safety net coverage should follow poverty rates, with areas with higher poverty benefiting from a stronger coverage. But in Bangladesh, the opposite seems to transpire.

For example, Barisal with a poverty incidence of 26.5 percent got social protection coverage of 59.9 percent in a particular year, said the report titled 'Bangladesh Social Protection Public Expenditure Review', which was unveiled yesterday.

On the other hand, Mymensingh, whose 32.8 percent of the population live in poverty, got coverage of only 27.7 percent that year.

In Bangladesh, 49-66 per cent of the beneficiaries of allowance and food support programmes are not poor, the report said citing the Multiple Indicator Cluster Survey.

"By improving the targeting of the social protection programmes, the country can further reduce poverty," it said, adding that reallocating existing transfers to the poorest could reduce poverty by 24 percent.

The report found that the social protection programmes were mostly focused on rural areas.

But with almost one in five of the urban population living in poverty and half of the households at the risk of falling into poverty, there is a need for rebalancing geographic allocations between rural and urban areas.

About 11 percent of the people in urban areas are covered by social protection whereas 19 percent of the urban population is poor.

The coverage in rural areas is higher than the poverty rate, with programmes reaching 36 percent of people, while 26 percent live in poverty.

Using a social registry, such as the National Household Database can improve targeting of both programmes and households at a reduced cost, the report said.

Some risk groups remain underserved. In particular, there are gaps in programming for early years and the economic inclusion of poor and vulnerable youth and adults.

For example, in every eight poor persons, one is a young child. Yet, the poor young children receive only 1.6 percent of social protection expenditures.

"Investing in early childhood helps a child grow healthier and be more productive in adult life and thus break the cycle of poverty across generations," said Aline Coudouel, lead economist of the WB and a co-author of the report.

"The country has taken innovative programmes, reflecting the life cycle approach. As patterns of risk change in different phases of life, the lifecycle approach needs to encompass support from pregnant mothers to old age, persons with disabilities as well as from households facing shocks to those in chronic poverty," she added.

The social protection expenditures dedicated to persons with disabilities (PWDs) do not meet the mark, either.

The country's cost of disability is estimated at 1.7 percent of GDP while the share of the social protection expenditures dedicated to PWDs is only about 2 percent in fiscal 2018-19 (up from less than 1 percent in fiscal 2009-10).

Meanwhile, on average, it takes at least two months to transfer funds from the treasury to beneficiaries, in part because of a multiplicity of steps and delays can impact implementation.

For instance, for the Food for Work programme, central allocations were released relatively fast but delays of up to 100 days were noted between receipt of funds, project approval, implementation and payments.

The report recommends scaling up the government-to-person payment scheme that cut social protection fund processing time to 10 days.

The WB also suggests for following National Social Security Strategy (NSSS) that lays out a comprehensive roadmap for social protection in Bangladesh.

It recommends revising the list and strengthening the categorisation of social protection programmes to better inform policies, resource allocation, reporting and monitoring.

"We have many social protection programmes, but some of them are fruitless," said Hossain Zillur Rahman, executive chairman at Power and Participation Research Centre.

Certainly, the political inclination is to increase coverage size but benefit size needs to be addressed properly.

"Urban poverty is an emerging challenge and needs a plural programme. We should be exercising our minds to address it," said Rahman, also the chairperson of Brac.

The pandemic years have shown few lessons, said  Binayak Sen, director general at the Bangladesh Institute of Development Studies.

"Conceptually we must distinguish three categories of poor: the new poor, old poor and transient poor. But, we don't have an instrument to capture these categories. We also have to start applying the universalising principle to specific programmes such as old age, maternity allowances, nutrition programmes," he added.

Until 2015, the social protection programmes were limited to programmes for reduction of poverty and vulnerability of households, said Nazma Mobarek, additional secretary to the Finance Division.

After that, there has been a paradigm shift after adopting NSSS strategies including a lifecycle approach social security programme.

About concerns about better targeting, she said the government has taken several reform programmes digitising the payment system.

By June next year, all Social safety net will be paid through G2P, she added.

Over the last decades, Bangladesh has expanded its coverage of social protection programs that now reach three in every 10 households in the country, said Dandan Chen, World Bank operations manager for Bangladesh and Bhutan.

"The COVID-19 pandemic has accentuated the need for a more robust, efficient and adaptive social protection system," she said.

Going forward, well-targeted and less fragmented social protection programmes that consider the demographic change, unplanned urbanisation, labour market vulnerability and frequent shocks will help the country continue with its success of poverty reduction, Chen added.