Q&A

Six things you should know about Social Protection in Africa

African Ministers of Social Development, Labour and Employment are discussing social protection for inclusive development from 23-24 April 2015 in Addis Ababa, Ethiopia. Key policy recommendations and strategies are to be adopted by Member States. ILO News talks with Luis Frota, Social Security Specialist in the African region, to assess the reality on the ground and share good practises.

Feature | 22 April 2015

1. Could you explain the nexus of social protection, poverty reduction/inequality and inclusive growth?

Social protection contributes significantly to poverty reduction and tackling inequality. In Namibia, in the absence of current social transfers, poverty headcount would be 18% higher. A social protection floor of basic guarantees would further reduce inequality. Social protection contributes to curbing inter-generational poverty transmission. By responding to people's immediate basic consumption needs, it restores human capital. It nurtures, maintains and enhances human capital across the life cycle. It enhances the cognitive capacity of children and therefore their ability to participate in an increasingly knowledge and service based economy. Social protection enhances access of the most vulnerable to social and health services thereby contributing to developmental outcomes including basic education and literacy and increases the health status of the population.

2. Five years after the ILO Tripartite Declaration on the Social Protection Floor for Africa, where do we stand?

A growing number of countries have adopted national social protection policies or strategies that consider national social protection floors as a priority (Kenya, Zambia, Ethiopia, Lesotho, etc. A few countries have created new regulatory frameworks for social protection and have set up coordinated structures to implement social protection (Social assistance Law and a draft social protection Council Law in Kenya) and have expanded/scaled up significantly existing basic social protection mechanisms (Kenya, Zambia, Mozambique, Uganda). Some countries have increased funding from Government to social protection (New child benefit in Lesotho funded by Government from 2014; 800% increase in government allocation to social protection programs in Zambia in 2014). A few countries have made significant steps towards comprehensive contributory social security coverage, such as Lesotho (as envisaged under its new national social protection policy and Draft 2014 Bill on comprehensive social security).

3. What are the main challenges of current social security systems in Africa?

Social protection floor guarantees have expanded in relative terms but remain relatively low in national budgets. Investment is still limited to a narrow set of guarantees. Notably, despite growing number of health care finance strategies in the continent, reinforcing the principles of Universal Health Coverage, access to essential health care is still limited in practice, with a few countries only achieving broad coverage (Rwanda, Ghana) and a few implementing or experimenting new mechanisms (Zambia, Namibia, Kenya). Many countries still have a limited number of risks covered under their contributory social security system and some lack any social security.

4. Could you share good practices of universalizing pension systems and basic income securities in the continent? What are the key drivers for providing a minimum package of social benefits and services?

Mauritius, Cape Verde, Mozambique, Lesotho, Namibia and South Africa are countries that have established national wide platforms for the delivery of guaranteed minimum benefits. Other countries like Kenya, Zambia, and Uganda are consolidating and expanding their existing social cash transfers. Kenya is making enormous progress in terms of coordination and streamlining of the delivery mechanisms and Zambia has embarked on a remarkable expansion of the existing system. Amongst the key drivers of these reforms is a favorable political environment which includes the awareness of social protection as an investment in poorer people, including their role in the protection of their assets and sustaining and promoting their livelihoods. This is thanks to growing evidence in the continent of the strong impact of social transfers on local economies. Social protection is also understood as an instrument for social cohesion and as contributing to fair and equitable development. Reforms have also been possible thanks to increased prudent macroeconomic management by African countries, and the increasing fiscal space made available with fast economic growth. Finally, there is a clearer understanding of the administrative platforms needed to deliver benefits in some cases in distant and poorly equipped rural areas, thanks to new low cost information and communication technologies and public private partnerships.

5. Are African countries with social protection programs better equipped to respond to crisis mostly when the economic growth is low and inequality is rising?

Social protection has proven to accelerate economic recovery when systems are in place before crises occur. Even when they do not cover the working age population, social protection systems allow sustaining consumption over periods of economic downturn, maintaining economic activity in poorer areas. It also prevents inequality to be heightened in the short term as poorer people have fewer savings and their living standards therefore suffer more immediately than those of richer people. Finally the poorer are more likely to sell productive assets for immediate consumption. Social protection helps to maintain the assets of the poorer segments of the population, with a positive effect of the prospects of economic recovery and future growth especially in the bottom levels of the income distribution.

6. How do we extend social protection coverage to 90 per cent of the population, mainly those in the informal economy? What are the ILO policy recommendations?

The informal economy is heterogeneous. It encompasses unprotected wage work in the organized sector and non-waged work in the unorganized sector. It cuts across many occupations and economic sectors. The ILO believes that a minimum package of social protection benefits can be made available to all workers, including workers in the informal economy. A number of mechanisms supported by a plurality of funding modalities can be implemented. Tax and mixed tax and contributions funded systems can support programs aimed at those with non-existent or poor contributory capacity, such as with subsidized health insurance systems. Also for example, the combination of well-coordinated floor of social pensions and higher income protection instruments for old age can ensure universal pension coverage.