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Strengthening and scaling up of the social protection system – Part 2

UNICEF Mozambique
© UNICEF Mozambique
UNICEF Mozambique had developed a social protection strategy in 2007 focusing on the role of cash transfers for children affected by HIV and AIDS and other vulnerable children.

MAPUTO, Mozambique, 5 September 2011

Strategy & implementation:
UNICEF Mozambique had developed a social protection strategy in 2007 focusing on the role of cash transfers for children affected by HIV and AIDS and other vulnerable children. Taking this further, in 2010, with the support of Oxford Policy Management (OPM) an internal paper was developed. The paper was grounded in evidence-based research to re-ignite advocacy efforts with the Government for expansion of social protection programmes. The paper undertook a pre-feasibility study and costing analyzes of three social protection reform options. The policy options included a) scale-up of the cash transfer amount to account for inflation; b) the expansion of potential beneficiaries receiving the transfer such as child headed households, and c) the option of a conditional cash-transfer or public works programme. These policy options strengthen UNICEF’s engagement across the sectors by particularly looking at health user fees, education expenses, school feeding and cash transfers, within the context of the Government Five Year Plan 2010-2014. The review was built on recent analyzes of the MICS (Multiple Indicator Cluster Survey) 2008, National Household Survey 2009 (the IOF), Census 2008 and the evaluation of the National Cash Transfer Programme (PSA) datasets. The paper provides useful information to the Government through concrete costing of different social protection policy options that link any suggested programmatic response to required resources. The cost-benefit analysis addresses the frequent disconnect between desired programmes (that are possible with the existing institutional capacity within the MMAS) and spending decisions (proposed by the Ministry of Planning and Development [MPD] and Ministry of Finance) that focus primarily on maintaining fiscal and macroeconomic stability. Engagement with IMF The pre-feasibility and costing analysis report presented the opportunity to brief the new IMF Mozambique Country Director on the corresponding social protection options in Mozambique. The IMF expressed considerable interest in transferring spending from the expensive and politically charged fuel subsidy programme to more progressive social protection programmes. Subsequently, the IMF requested information on the social protection programmes in the region, including scale, targeting, and impact in preparation for an upcoming IMF mission to Mozambique. The provision of a policy brief on conditional cash transfers developed by UNICEF in April 2011 and its internal strategy paper opened the door to fuller engagement with the IMF, including an opportunity to jointly with other UN agencies brief the mission team and provide an equity and child-sensitive approach to social protection for the IMF’s Memo on Economic and Fiscal Policies (MEFP). [7]

The Social Protection Floor Initiative (SPFI) [8]
Given this growing momentum and Mozambique’s subsequent nomination as a pilot country for the SPFI in 2011, UNICEF proposed a Memorandum of Understanding (MOU) among the key players, including the ILO, IMF and the World Bank. This model of engagement for enhanced social protection floor in Mozambique [9] supports the national policy dialogue, particularly to inform the Government around policy options related with the implementation of the ENSSB. The joint work includes (a) a review of the Basic Social Security programmes and Social Protection Expenditure in the country and (b) an estimate of the cost of income security provisions which would complete the income security component of the social protection floor in Mozambique. [10] UNICEF together with ILO and the World Bank, undertook the review of the Basic Social Security programmes and the Social Protection Expenditure Review. This exercise contributes to improving decision-making around social protection by informing the government of (a) specific risks and vulnerabilities of the population by age group and gender; (b) gaps and overlaps within the social safety nets relative to such risks and vulnerabilities; (c) benefit incidence of selected programmes; and (d) inputs for the prioritization of government action regarding basic social security. Further, with ILO and IMF, UNICEF developed an additional/expanded set of costing tools to support ministries in determining the cost of implementing the basic elements of social protection under the SPFI. In undertaking this exercise, UNICEF and its partners combined three sources of evidence (a) household micro-data on demographic composition and wealth from the latest nationally representative IOF; (b) population projections by age and sex constructed by the National Institute of Statistics on the basis of the 2008 Census; (b) projections of the macroeconomic scenario and fiscal aggregates, produced by the IMF. By combining these three sources, the costing model simulated the cost of a series of alternative policy options [11] for 2012-2015. The model provides flexibility to compare alternative scenarios for eligibility, targeting, value, periodicity of the transfer and so on. The costing tool has two versions: a flexible version in data analysis software for internal background use and a simpler user friendly Excel version to facilitate future planning and analysis.

Progress & results:
The costing tool has supported the Government, and particularly the MMAS, in the design and costing of a holistic social protection system in line with ENSSB 2010. The costings were the main technical input that UNICEF, along with partners ILO, WFP, IMF and World Bank provided to the Naamacha Conference in May 2011. This conference was requested by the Ministries to provide a forum to discuss the design of the national social protection programme. In particular, UNICEF, ILO and WFP provided technical inputs with regards to cash transfers, productive safety nets, costing models, fiscal space and linkages of social protection to other economic, social and child protection services. The development of the costing tool has enhanced capacity of the MMAS to engage with the Council of Ministers and particularly with the Ministry of Finance. Direct engagement by the Minister of MMAS and her senior cabinet members in considering the various policy options and their cost has allowed the Ministry to understand budgetary implications of this initiative. MMAS has submitted an expanded scope for implementation of the ENBSS to include child headed households and alternative care families as direct beneficiaries in its social protection cash transfer programme. This has been presented to the Council of Ministers for its decision in August 2011. The proposal now includes an increase of the overall subsidy, including an increase to the amount per dependent (i.e. per child living with the elderly transfer recipient, up to a maximum of four children) as well as an indexation mechanism for the adjustment of the benefit on a regular basis to compensate for loss of purchasing power due to inflation. The strengthened capacity of MMAS has been noticeable, including in media coverage of the Minister’s engagement on the issue of vulnerable children and their families. At the same time, informal information sharing and dialogue between UNICEF, the ILO, IMF and the Ministry of Finance about the ongoing costing efforts has helped create an enabling environment for these delicate discussions. Donors have taken notice of this enhanced engagement as well. The Government of Sweden has committed US$ 7 million for 2011- 2012 for continued systems strengthening and the gradual scaling-up of sustainable social protection initiatives. This will be done through a UN Joint Social Protection Programme involving UNICEF, in partnership with ILO and WFP. Further, in March 2011, when the Government unexpectedly announced a Cesta Basica subsidy [12] on food and transportation for urban workers under a certain wage level, UNICEF with the ILO was able to immediately offer the MPD the support in applying the costing tool to the proposed subsidies. The Cesta Basica was being commonly referred to by Government as a social protection measure to help urban workers and students overcome shocks from increasing fuel and food prices. However, UNICEF and its partners quickly recognized the proposed instruments as a costly and potentially unsustainable impact mitigation measure that did not effectively target the poor. Using the tool to cost out the Cesta Basica allowed for easy comparisons with the costs of other potential social protection interventions, and opened discussions around the expansion of the current cash transfer programme (the PSA), implementing the public works programme (the Strategic Plan for the Reduction of Urban Poverty or PERPU) [13] and productive safety nets (through investment in agriculture and increased access to credit and markets). This technical assistance was highly valued by the Government as it provided MPD with evidence to substantiate arguments, including easy comparisons with the costs of other potential social protection interventions. By July 2011, the Government announced the Cesta Basica would not be implemented, bringing social protection into the political mainstream and opening up a political space for constructive debate and policy engagement.

Next steps:
The costing of alternative social protection options will be presented by MMAS at the Council of Ministers meeting in August 2011. If approved, this decision will be a significant step forward for social protection in Mozambique, including increased fiscal space available for social transfers and productive social safety nets and well as enhanced political interest and commitment towards sustainable poverty reduction measures. With high expectations for a positive result from the Council of Ministers, a Donor Roundtable is being planned for immediate engagement with existing and potential donors on the larger framework. Once an operational plan is in place, UNICEF and its partners will continue to provide technical support for the implementation of social protection programmes through MMAS and productive social safety nets through MPD. Dialogue also continues with the Government around alternatives to the Cesta Basica and how best to use the fiscal space opened up by the proposed reduction of the fuel subsidy. Opportunities to compare and contrast the Mozambique experience within the context of the SPFI for enhanced advocacy are also being explored. In discussions with the ILO, IMF and World Bank and other partners, UNICEF is considering bringing global leaders to Maputo to speak on social protection and fiscal space, as well as on the role of the extractive industries for equitable social development in Mozambique. [14]

[7] The November 2010 Memo on Economic and Financial Policies (MEFP) described recent developments and performance under the Government of Mozambique’s economic programme under the three-year Policy Support Instrument through April 2011; it summarizes the Government’s poverty reduction strategy envisaged in the new PARP; and elaborates on macroeconomic policy and structural reform intentions for 2011.
[8] The SPFI is a global UN-wide effort involving 17 UN agencies, to promote the extension of a set of social policies designed to guarantee basic income security and access to essential social services for all, paying particular attention to vulnerable groups, especially children. Recognizing the importance and necessity of adequate social protection systems, the UN Chief Executives Board adopted the SPFI as one of its nine key priorities to cope with the current global crisis. For more details visit the Social Protection Floor Initiative’s website.
[9] Social Protection Floor Initiative - Social Protection Floor Country Brief – Mozambique: Annex 2
[10] Calculations were undertaken according to a global protocol genuine to Rapid Assessments done worldwide, with flexibility to accommodate national accounting standards, the possible options already taken under the ENBSS and limitations of the available national data.
[11] The policy options were presented via three approaches to highlight the cash transfer choices available to the government: (i) coverage to a larger percentage of the population with a lower transfer value; (ii) coverage to fewer beneficiaries but with a higher transfer amount and (iii) more balanced coverage with both the value and coverage as intermediate options.
[12] In March 2011, the Mozambican Government announced it would cut the subsidies paid to fuel retailers and subsidise a basket of basic foodstuffs (cesta basica) for formal sector workers below a wage cap of 2500 metical (approximately USD 83 per month) in the country’s 11 provincial capitals. Additional transport passes would also be made available for the same workers as well as students. The cesta basica was not an actual basket of food items but a subsidy that would activate when the cost of an identified amount of household food items exceeded 282 meticals (approximately USD 9). Participating stores would then provide the designated items to those eligible via a voucher system, including oil, eggs, beans and sugar, for the 282 meticals and be reimbursed the difference by the Government.
[13] The Strategic Programme for the Reduction of Urban Poverty, 2010-2014 (PERPU), announced in March 2010, provides cash transfers for public works as a means to address poverty in urban areas. Unlike pre-existing social safety net programmes in Mozambique, the PERPU enjoyed a corresponding budget line in the national budget via the Medium Term Expenditure Framework – a significant indicator of its political support, given the limited resources allocated to other currently implemented programmes.
[14] In June 2011, economist Jeff Sachs, the Secretary-General’s Special Representative on the Millennium Development Goals (MDGs) and Director of the Vale Columbia Center on Sustainable Development (A Joint Center of Columbia Law Center and The Earth Institute of Columbia University) presented their analysis: Resource Based Sustainable Development in the Lower Zambezi Basin, to Government and donor partners in Maputo.

By Lisa Kurbiel



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