Global 1998: Social Funds in Developing Countries: Recent Experiences and Lessons
Author: Reddy, S.; UNICEF NYHQ
Social Safety Nets (SSNs) are the institutions and regularized practices which serve to protect individuals from remaining or falling below a defined standard of living. A variety of SSNs have existed in developing countries for decades - employment generation schemes, food subsidies, targeted health and nutritional support programs, etc. In recent years, these have been complemented by new social safety net models - known as emergency social funds, social investment funds, and social action programs, which are the central subjects of study of this paper. The new forms of SSNs have been typically multi-sectoral, demand-driven, and often administered by independent and specially created institutions. Projects sponsored by these SSNs can be designed and implemented by NGOs, municipalities, private contractors, or existing ministries. New developments related to social safety nets have significant resource and program implications in many of UNICEF's areas of activity worldwide, including the delivery of basic social services, and the reduction of poverty.
Purpose / Objective
This review seeks to comprehensively survey and analyze the literature on the new social safety nets, so as to enable UNICEF staff to better understand and respond to these developments. It is not intended to provide immediate operational recommendations It is sought that this review should:
- Examine in a context-sensitive manner the rationale, purpose, appropriate role and design of Social Safety Nets (SSNs) in developing countries, with a special focus on social funds and other recent social safety net innovations
- Provide accessible analytical concepts for UNICEF field staff, to use in the national-level analysis and design of social safety nets, and with which to engage in effective policy dialogue with governments, and multilateral and bilateral agencies
This review undertakes a broad-ranging survey and analysis of recent social safety net experiences worldwide with the goal of identifying lessons relevant to their design and evaluation.
Key Findings and Conclusions
Emergency social funds, social investment funds and social action programs have been implemented or are being planned in a large number of developing countries (at least forty-five in total), spanning all regions. Although the largest number of these SSNs are still in Latin America and the Caribbean, more are today in other regions.
The level of resources devoted to recent SSNs has often been sizable. In a sample of countries, SSN expenditure was estimated to average 10.3 %of total public social expenditures and 32.6 % of expenditures on basic social services. As a result, SSNs provide a significant opportunity to influence allocation priorities, and to shape expenditures so that they are effective, efficient, and equitable, and best serve the interests of the poor.
The majority of recent SSNs have been multi-sectoral, in the sense that they have financed activities that would otherwise fall under the jurisdiction of a variety of ministries. Multi-sectoral programs have notable disadvantages as well as advantages. Multi-sectoral programs should not be entirely avoided but rather confined to a manageable scale and operated according to appropriate principles.
Many recent SSNs have been demand-driven in the sense that projects financed by the SSNs have been largely selected in response to proposals from external entities, such as NGOs, municipalities, and community organizations. In supply-driven SSNs, in contrast, the SSN management designs projects. Demand-driven programs have many advantages, but can be difficult to administer and may face challenges in reaching the poor. Demand-driven schemes should be accompanied by measures which enhance the capacity of the poor to formulate and present project proposals, and by selection procedures which discriminate in favor of projects which benefit the poor.
A common characteristic of many SSNs is that they are administered by bodies which are relatively autonomous from existing social ministries and other branches of government. Autonomous SSNs can generate efficiency disadvantages where existing social ministries are already fairly strong. In contrast, where existing social ministries are ineffective, autonomous SSNs can offer significant short-term gains and even serve as a model or foundation for the ultimate renovation of existing social ministries.
Recent SSNs have employed a number of managerial innovations, including pay scales substantially above those in the national civil service, more flexible methods of recruitment, extensive use of information technology, and standardized estimates of unit costs of goods and services procured. The managerial innovations employed in recent SSNs merit serious consideration for broader use in social ministries. However, some of them (for example high salaries or formulaic project selection procedures) may not be sustainable or likely to bring benefits of lasting value.
There are a number of reasons to be seriously concerned as to whether recent SSN models are consistent with the sustainable fulfillment of social objectives, including their possible consequences for the long-term effectiveness of existing social ministries. While there is good reason for worry about the sustainability of SSN benefits, appropriate measures can mitigate each of these concerns. In particular, new institutions should not automatically be preferred over old ones and considerably greater attention should be devoted to enhancing the long-term capacity, and flexibility, of existing social ministries.
Equity in access to the benefits delivered must be an overriding concern when evaluating and designing SSNs. The equity record of SSNs is mixed. Many SSNs have demonstrated regional, gender and class biases. All varieties of SSNs face serious challenges in reaching the poor, but these may be partially ameliorated through the use of instruments such as poverty maps in conjunction with formalized pro-poor project selection procedures.
Recent demand-driven SSNs have employed a variety of intermediary organizations to demand, design, and implement projects and deliver benefits, including community organizations, non-governmental and private voluntary organizations, municipalities, and private for-profit organizations. Although this approach has had notable successes, there is also some reason for caution. Community participation is not always either genuine or equitable. Demand-driven SSNs should be expressly accompanied by measures designed to enhance the capacity of NGOs, and to ensure that they are internally equitable and representative of communities.
Recent SSNs have had mixed consequences for women. Achieving gender equity in the design and implementation of SSNs requires attention to such factors as the form of benefits (for example, in cash vs. kind, or employment generation vs. service provision), and the nature of executing agencies (NGOs vs. private contractors).
The political dimensions of SSNs have been of considerable importance. Many recent SSNs have been formulated with political objectives, including generating support for ruling interests, and building support more broadly for a program of economic adjustment. In practice, examples of both highly politicized and less politicized SSN implementation can be found. SSNs can serve as a vehicle of political co-optation of independent NGOs and community organizations or alternatively as the basis for the development of a more vibrant and potentially independent civil society.
The links between SSNs and the macro-economy should also be considered in design and implementation. In general, there is a need to ensure that the fulfillment of social objectives, whether through SSNs or other means, is included at the center of the process of economic planning and management, rather than as an afterthought or purely compensatory device.
These conclusions underline that the design of social safety nets so as to fulfill social objectives effectively, efficiently, and equitably is a complex exercise. Recent SSNs in developing countries have been neither universally outstanding successes nor outstanding failures, and have not by themselves been large or effective enough to serve as the answer to the social costs of adjustment or economic crisis. They do, however, add to the repertoire of social policy innovations which can be of benefit when used judiciously within a larger program of economic and social efforts directed towards social equity.
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