Setting Priorities For Social Protection

Social protection is expanding around the world with new and innovative plans, policies and programmes supported by devoted resources. This is not a luxury, but a need of evolving society. All efforts towards lifting people above the poverty line and preventing people to fall below the poverty line can be counted as social protection. People have right not to be in poverty, suffering and destitution. And the informed and empowered people demand it from the state. However, this is one of the areas in government programme which still gets relatively fewer budget allocations while there is persistence need to extend social protection coverage.

Governments around the world have increasingly realised the benefit of social protection. Developing regions of the world and the world as a whole has been encountering various crises caused by different shocks. This has made people’s livelihoods uncertain and vulnerable. Development gains have been reversed. Many households have fallen into poverty. Covid-19 pushed people in poverty. Evidences show that only the resilient societies supported by better social protection coverage have become successful in protecting their development gains. In other words, social protection creates a resilient society. Consequently, targeted social protection programmes and cash transfers are increasing along with allocated budget.

Resilient society

To create a resilient society, there must be an inclusive and universal social protection system in place. Everyone should contribute at good times and benefit during difficult times. Those who cannot contribute because of some genuine reason, government should help them. Such system must be guided by appropriate regulatory framework and information management system. Information about peoples’ changing living conditions must be updated and made real-time.

Nepal, despite being a least developed country, has 30 years’ long history of universal social protection through cash transfers to the elderly. Age eligibility has now been reduced to 68 years to extend coverage. Thirty years ago, it was 75 years. At a glance, it seems odd to reduce the eligibility age, this criterion extends social protection coverage. This complies with the 15th plan target of extending coverage from 17 per cent of the population to 60 per cent. In the meantime, amount of cash benefit has also been progressively increased to Rs. 4000 per month from the initial Rs. 100. Although this amount is not adequate to fulfill all the basic needs of the elderly populations, it has helped them not to fall in poverty, promote care and respect of elderly members in the family. It has also helped improve nutritional intake in the households, thereby contributing towards human capital formation in the country. 

It is worthwhile to mention here that Nepal’s elderly allowance is an example of categorical targeting. Everyone above the age of 68 are entitled to the benefit, irrespective of their income or wealth status. This does not incur beneficiary identification cost, thereby not having the problem of inclusion and exclusion errors. The fact is that Nepal Government’s attempt to identify the poor households across the country has virtually failed after billions of rupees have been spent. This polycentric approach has been the main factor behind the continuation of this scheme of the last nearly three decades. Since rich households are also getting the elderly allowances, they are also in a way incentivised to protect and continue it. Globally, value of cash transfers has increasingly been recognised and backed by research evidence. A recent article titled “A Global Cash-Transfer Fund Could End Extreme Poverty” published in the Project Syndicate is proving this. It stated that “cash transfers offer a transformative solution to multidimensional poverty, by enhancing dozens of outcomes simultaneously. They have already proven effective, adaptable, and replicable, and now they are becoming more attainable every year with growing mobile coverage and improved digital infrastructure.” By applying technology in cash transfers, governments can reach to their disadvantaged population in a while with support. This cuts bureaucracy and improves social contract between the government and citizens. 

Nepal’s constitution guarantees rights to social protection. All the 31 fundamental rights enshrined in our constitution provide different types of social protection. Nepal’s federal government alone currently hosts 87 social protection schemes. Most of them are taxed-financed. This is an interesting development. Although there are some duplications and overlapping in these schemes, they perfectly comply with the fundamental rights. They cost about 15 per cent of the annual national budget and cover nearly one third of our population. This is a silent revolution for a country with about US$ 1400 per capita income.

Social protection schemes

With the objective of integrating these 87 social protection schemes and ensuring their fiscal sustainability, Government of Nepal has recently approved the Integrated National Social Protection Framework, 2024. It aims to extend social protection coverage and make it fiscally sustainable by reducing duplications and overlapping. It also aims to transform the existing tax-financed schemes into contributory schemes. For this to happen, institutional mechanisms have been created to ensure the participation of all relevant stakeholders engaged in providing different social protection schemes. There is also a high-level directive committee under the leadership of the Prime Minister. Many stakeholders are very enthusiastic about the implementation of the newly approved social protection framework, including the United Nations system, other donors and development partners in Nepal.

We request the world governments to come up with similar framework and better govern their social protection measures so that we can create a more resilient, inclusive and humane world. The world still hosts 700 million poor people who live below US$2.15 per day extreme poverty. We must have policy and budget priority for ending this and other forms of poverty and underdevelopment. Let us unite, voice and work for extended social protection coverage with adequate benefits. The proposed global cash transfer fund could play a vital role here.

(Dr. Bhusal is an expert in poverty, employment and social protection.)