Redesigning social safety net programmes to mitigate Covid-19 impacts
The Government of Bangladesh has allocated 17.83 per cent of the total budget for fiscal 2021-22 for Social Safety Net Programmes (SSNPs). The coverage is diverse; it includes programmes related to poverty eradication, education, health, infrastructure, disaster management, housing for the poor, amongst many. However, if we take out pensions and honorarium for the non-poor, educational stipends, agricultural subsidies and so on, the actual social safety net allocation comes down to 50 per cent.
Social Safety net programmes in Bangladesh have evolved over time depending on the needs and circumstances. The National Social Security Strategy (NSSS) 2015 laid the foundation for the lifecycle approach which calls for a long-term vision in implementing social safety nets such that these can be applied at various stages or lifecycle of a targeted household so as to mitigate lifecycle risks. The lifecycle approach is a welcome shift from the relief-based or hand-out approach as it is more strategic and makes a pathway centric approach for poverty eradication while ensuring that the households do not slip into poverty.
The scope and purpose of social safety net vary. At the very core, the purpose of it is to ensure that a targeted beneficiary is protected against a shock or supported to withstand a shock or to recover from a shock. It should be acknowledged that its scope goes much beyond shock mitigation or absorption. However, in context of Covid-19, I would focus the discussion on shock mitigation and absorption.
In the aftermath of a disaster, the government provides food assistance; it then gradually expands the scope to activities like food for work or cash for work which ensures that rehabilitation works also allow for capital injection within the local economy. The social safety net thus allows for money to flow within a cash starved economy. This works in the short term. However, as households begin to recover, their economic needs shift. As such, a social safety net in isolation of programmes for enterprise development or value creation is only half as effective. This led to the emergence of push-pull approach or pathway approach within the purview of the lifecycle approach. From the perspective of intervention outcomes; the social safety nets work to push the households upwards to a level of safety from where the pull approach involving livelihood support, enterprise development activities, micro-credit, skills development and such could come to play to lift the households further up so that the risk of falling back is mitigated. We now have evidence from programmes implemented by the Palli Karma Shahayak Foundation (PKSF) that the push and pull approach is more efficient and cost effective in terms of sustainable graduation of households out of poverty. It maximises the return of social safety nets and given the long-term nature of involvement (spreading well beyond five years with each targeted household), the approach ensures that lifecycle risks are mitigated. Even though evidences show that safety nets could be dynamic and systemic, and the NSSS has laid the foundation for it, the review of the implementation effectiveness of the safety nets in the fiscal 2020-2021 and the allocations of the fiscal 2021-2022 reveal a widening gap between policy and the reality, especially in relation to the safety nets designed to respond to the impact of Covid-19.
CURRENT SAFETY NETS ARE SHORT OF ADDRESSING THE CHALLENGES EXPOSED BY Covid -19: In the fiscal 2021-2022, the government has kept the provision of Tk 11,075 crores in safety net for Covid-19 response. This includes Tk 2800 crores as interest subsidy for small and medium enterprises (including cottage industries), Tk 45 crores as assistance for unemployed workers in the export-oriented garment and footwear industry, Tk 930 crores as grants to 8 CMSME organisations to accelerate economic recovery, Tk 7300 crores as funds to combat the outbreak of the corona pandemic-- the scope of this fund includes cash assistance, protecting targeted population from Covid-19 outbreak and to mitigate health risks. Beyond this the emphasis is on CMSMEs. Is this allocation at per with the need?
We know by now that the impact of Covid-19 has been much more severe on urban informal economy involving workers in sectors like transportation, construction, grocery shops and restaurant businesses. The slide of the lower middle-income class and the emergence of the new poor in the urban economy is now well established. We do not find any reference to this in the current allocation. We know that rural non-farm sector has been devastated while agricultural output and income bounced back after the initial blow. We cannot find direction on supporting the rural non-farm sector through social safety net. People with disabilities, marginalised population and communities (like the sex workers, transgender) and the female headed households have been the hardest hit. While the allocation for these households has increased in the fiscal 2021-2022, it does not take into account the fact that the Covid-19 response would require more than petty allowances which has always been prone to selection biases. While the health system continues to struggle to cope with the pandemic, there is a parallel and looming health crisis which might soon become catastrophic. Households in the lower income categories are cutting down on their health expenses which is increasing the risk of mortality due to non-communicable diseases. The prolonged closure of educational institutions has increased drop outs. Evidence shows that adolescents girls are now at higher risk of early marriage and child birth. The proposed safety net programmes come short in addressing these emerging challenges that are unique but would become permanent if not immediately addressed.
According to IOM, approximately 408,000 migrants have returned due to Covid-19 during the period April-December 2020. Short-term cash transfer along with allocation for enterprise loans could be used to leverage the skills that these migrant workers have brought in. The social safety net allocation for fiscal 2021-22 unfortunately fails to leverage this potential and remains blind to the need of the migrant workers.
SAFETY NETS NEED TO EVOLVE TO MULTILEVEL AND MULTISECTORAL LONG-TERM PROGRAMME: It is evident that the government identifies safety net as an instrument to tackle the economic shock of Covid -19 on the poor and the vulnerable. But it is also evident that the government's approach is disconnected to reality-- skewed towards traditional sectors and schemes and comes short in addressing the emerging challenges. We must rethink the application of social safety nets not just as temporary instruments for shock absorptions, but as levers to address some of the persistent systemic constraints. There have been progresses, for example digitisation of cash transfer. But the promise of safety net as a dynamic instrument for shock response remains unexplored.
Research undertaken by development agencies, consultancies and think-tanks have shown that the population in this segment had only 7-10 days of cash in hand at the time the first shut down was imposed. This meant that the prolonged shut down increased their credit burden (especially for house rent), forced them to exhaust their savings, borrow informally and cut down heavily on food expenses; especially protein intake. A multilevel safety net involving cash transfer, food voucher, partial absorption of the rent and supply of enterprise loan with long term grace period would mean that the households are not only able to meet the current cash need but are also able to gradually move up from the shock as they rehabilitate to formal economy. This would ensure that the push and pull are both in play to lift the households from the current distress. Furthermore, if the government employs the unemployed and displaced households for production and distribution of the food under the food voucher scheme, it would increase the value of the money transferred. Local purchase of the ingredients for the food would induce vitality in the local economy.
Bangladesh's success in immunisation coverage, reduction of maternal mortality and mortality of infant and children under five is largely attributed to its front-line health systems where both state and non-state actors play a synergistic role. Satellite clinics and health camps could be scaled through state and non-state actors to address the looming health crisis among the vulnerable households in both urban and rural areas. There is no allocation in the safety net to address the burden of non-communicable diseases among the marginalised households which is being compounded by Covid-19. The current safety net allocation is silent in addressing the issue of drop outs from schools and early marriage of girls. The digital divide has further widened the gap in education between the poor and the non-poor. Given this, the government should have expanded the coverage of education stipends while at the same time repurpose the existing stipends to address the issues of drops outs, early marriage of girls and addressing the digital divide. However, success of such campaigns would depend largely on targeting effectiveness. In this context, Covid-19 further revealed the need to expedite the process for a national digital registration system for selection, disbursement and management of social safety nets. In the absence of it, the collective power of the community represented by teachers, peers and community leaders could be harnessed to bring under coverage the students who are at higher risk of drop outs or at risk of early marriage.
In 2020, the government allocated Tk 2503 crores for free food distribution. Assessment undertaken by the Centre for Policy Dialogue (CPD) showed that only 43 per cent of this was disbursed. In contrast, Tk 1238 crores was allocated or cash transfer and of these, 70 per cent was disbursed. We have evidence that cash transfer is more effective as it provides the households the scope to decide on the best use of the cash which eventually ensures that they are less exposed to debt and less prone to exhausting their savings. The government needs to capitalise on these lessons as it designs and implements safety nets.
RIGHT SIZING THE SAFETY NET PROGRAMMES: Expanding the coverage of the safety net every year does not essentially mean that the government is being responsive to the need of the poor. The purpose of safety net programmes should be to target them appropriately. These should be applied only for those who are unable to participate in economic activities or who need support for economic rehabilitation (for example, the old age allowance, allowance for disaster response, allowance for the people with disabilities and such). This would require long term strategic planning and inter-agency collaboration for implementation effectiveness and efficiency. Covid-19 might have provided the foundation to fast track the process as the need for such has never been profound as it is now.
Md Rubaiyath Sarwar is the Managing Director of Innovision Consulting Private Ltd.