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The need for safety nets

  • Published at 06:09 pm January 22nd, 2014
The need for safety nets

Social protection is now recognised as the single fastest way to fight poverty. Developed nations around the world invest heavily in social protection and welfare to prevent the recurrence of severe poverty in their societies.  It is this investment that keeps them in the “developed countries” status, and prevents the decay of their human capital. 

Bangladesh is globally recognised for taking a proactive stance with social protection. Our government this year allocated 2.13% of the GDP to social protection, which amounts to approximately $3bn. This is a significant amount. Furthermore, the government has over 90 safety net programs, underscoring its commitment to social protection. 

However, if we want to become a pro-poor middle income country by 2021, we need to speed up our efforts to eradicate extreme poverty and streamline our social protection system and budget so that it tackles poverty in the most effective way possible. 

Safety nets in Bangladesh have historically focused on food rations and disaster relief. This has gradually widened to include life cycle needs. The safety net budget is approximately 50% for food and disaster relief, with the rest going to work for cash, human development stipends, and old age allowance. 

While most of these social transfers are not enough to support a person’s livelihood, they do provide a regular cash flow and some alleviation of deprivation, enabling poor recipients to survive. This protective state function is necessary for people excluded from the market economy. 

Alongside this, the country needs wide-scale transformative programs which enable able-bodied recipients to engage with the market and climb out of extreme poverty. Together, this two-pronged approach can lead to rapid eradication of extreme poverty, if done right. To ensure optimal efficiency, there are some gaps that need to be addressed.

Insufficient coverage 

Though the budget allocation to safety nets is significant, it is not enough to mitigate the suffering of the 25 million people who are extremely poor. A large portion of the budget goes to funding social pension rather than the needs of the poorest. Furthermore, each stipend or transfer, at an average of Tk300 per person per month, is insufficient to enable the recipient to meet basic consumption needs (far from save anything for rainy days) and is often referred to as “tokenism.” Both the total coverage and the amount per transfer need to be increased.

Need for coordination 

No single ministry takes ownership of the disbursement of safety nets. This creates cumbersome bottlenecks. While numerous ministries may contribute to the budget, it is helpful if there is a single organising agency that manages the process of disseminating funds to the poorest. The social welfare ministry might play this coordinating role while a private sector company might be well positioned to take responsibility for fund distribution.

Targeting 

As there is not enough money to go around, the selection of the neediest becomes a murky issue. Safety nets are often used for purposes of patronage and UP chairmen decide somewhat unfairly who is eligible and then distribute funds accordingly. Eligibility does not lead to access. While some might argue that a universal social protection package might overcome this problem, in reality, some amount of targeting is necessary to ensure that the poorest of the poor receive the safety nets because the most marginalised members of society tend to be “invisible,” living in the most remote regions of the country.

Payment mechanisms 

Most social transfers are disbursed by government banks. Vulnerable people often have to line up in long queues outside banks that are far from their homes. With Bangladesh’s dense mobile coverage and rapidly expanding mobile transfer programs, perhaps it is time to explore more digitally savvy payment mechanisms.

Grassroots reality

Shiree is a government of Bangladesh and UK partnership livelihoods program that provides transformative asset transfers and skills training to 250,000 extreme poor households across Bangladesh. On average, households receive about Tk15,000 worth of assets at one go, along with a holistic range of services. 

This large outreach gives Shiree an opportunity to monitor households and helps generate a better understanding of the dynamics of extreme poverty and the effectiveness of interventions intended to address extreme poverty in Bangladesh. From Shiree data, we find, 91% of extremely poor beneficiaries (before joining the Shiree program) had not received any safety net support from the government, though they all fell within the bottom 5% of the population, and were in desperate need of support.

The figures have improved over the years, as efforts to make the poorest more visible at the union level, have helped them gain access to the safety nets that they are entitled to. NGOs have helped in this process by setting up support group networks and arranging workshops where government officials, UP chairmen, health clinic workers can meet beneficiaries. This sort of GO-NGO partnership has been successful in various parts of the country. One success, for example, was in the Pabna region, where an NGO was able to help 400 extremely poor adivasi beneficiaries access safety net allowances. 

As we move towards a reformed social protection agenda, we hope to see the policymakers embrace some of the best practices of other nations to improve the transparency of safety net disbursement, efficiency of safety net targeting, and the enhancement of safety net budgeting to meet the growing needs of the poorest, most disenfranchised citizens of our nation.

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