International Symposium: solidarity et social protection in developing countries

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International Symposium solidarity et social
protection in developing countries

• Security for the Poor Social Protection as
  Social Risk Management
• Turin, April 23-25, 2003
• Azedine Ouerghi

2
Outline

• Poverty Reduction and emergence of SP in the Bank
• from dealing with the symptoms to attacking the
  causes
• The new approach to SP
• from ex-post poverty to ex-ante vulnerability
• new conceptual framework Social Risk Management
• Strategic implications
• as a sector but also as a theme
• from intervention-based to risk-based definition
• Implementation of the SP agenda in the Banks
  work
• strategic directions for the Regions (ex. of
  Africa)
• analytical and advisory services (ex. of VA)
• lending operations
• knowledge and capacity enhancement (ex. of WBI)

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Social Protection in the World Bank Development
Agenda

• First WDR on Poverty (safety nets) 1990
• Introduction of vulnerability concept and SRM
  framework as intellectual anchor of SP (1998-99)
• World Bank adopts Social Protection Strategy
  (2000), followed by Regional strategies
• WDR 2000 recognizes Security as a third pillar
  in poverty alleviation strategies (2000)
• New SP concept adopted by other institutions
• International community adopts MDGs (2002)

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Information Technology
Social Protection in the development agenda
Expanding Capabilities Providing
Security/Empowerment
Creating opportunities
WDR 2000
Globalization

Education
Health
Social Protection
Economic Development
Social Risk Management
The Instruments
MDGs
Social Fabrics and Institutions
Participation - Social Inclusion - Conflict
Resolution - Social Capital - Governance
The Process
Sustainable Poverty Reduction and Social Peace
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Outline

• Poverty Reduction and emergence of SP in the Bank
• from dealing with the symptoms to attacking the
  causes
• The new approach to SP
• from ex-post poverty to ex-ante vulnerability
• new conceptual framework Social Risk Management
• Strategic implications
• as a sector but also as a theme
• from intervention-based to risk-based definition
• Implementation of the SP agenda in the Banks
  work
• strategic directions for the Regions
• analytical and advisory services (example of VA)
• lending operations
• knowledge and capacity enhancement (WBI)

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Social Risk Management Framework Basic Thrusts

• The poor are typically most exposed to diverse
  risks (natural and man-made)
• The poor have the fewest instruments to deal with
  these risks
• ?The poor are the most vulnerable as shocks have
  strongest welfare consequences
• ?The high vulnerability makes them risk averse
  and thus unable or unwilling to engage in higher
  risk/high return activities (poverty traps)
• ?A reduction in vulnerability is thus both an
  end and a means of development

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Social Risk Management Framework SP an
investment in human capital

• Individuals start with a education stock of zero,
  and accumulate over time
• Individuals start with a maximum health stock,
  and de-cumulate over time
• An external (negative) shock leads to lower
  education stock accumulation/faster health stock
  de-cumulation if appropriate risk-management
  instruments are not provided
• Social Protection provides risk management
  instrument, thereby leading to higher education
  and health stock then otherwise, and hence
  contributing to better human and economic
  development
• A direct contribution to the key MDGs

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Social Protection and the MDGs
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Risk and Poverty
Income
Poverty line
Time
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Risk and Poverty
Income
Shock
Poverty line
Time
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Risk and Poverty
Income
Shock 1
Shock 2
Poverty line
Time
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Income and Consumption
Income/Consumption
Time
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Income and Consumption Poverty Spiral
Income/Consumption
Time
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Consumption with Insurance
Income/Consumption
Time
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Income Smoothing
Income/Consumption
Poverty line
Time
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Poverty and Vulnerability
? Chronic poor could be seen as the very
vulnerable, temporary poor as the vulnerable,
and the non-poor as non-vulnerable
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Poverty Dynamics and Vulnerability

• Poverty is not static but dynamic and to large
  extend influenced by shocks (realized risks) and
  availability of instruments
• A mere ex-post view of poverty does not catch
  future poor and the effects of risks on current
  poor
• Vulnerability can be defined as expected welfare
  loss due to future events (risks) for a given set
  of risk management instruments
• Operationalizing vulnerability (i.e. defining and
  measuring it) is hence a way to assess progress
  in SRM and improve poverty alleviation

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Social Risk Management Framework Basic Elements

• Is based on the concept of asymmetric
  information in an imperfect world
• Takes account of the multiple sources of risk
  and their characteristics (such as idiosyncratic
  and covariant risk) to address vulnerability
• Operates with multiple strategies (prevention,
  mitigation, coping) and arrangements (informal,
  market-based, public) to deal with risk
• Attempts to match the multiple suppliers of risk
  management instruments (such as households,
  communities, NGOs, and governments) with key
  demand groups (formal, informal-urban and
  informal-rural workers)

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Outline

• Poverty Reduction and emergence of SP in the Bank
• from dealing with the symptoms to attacking the
  causes
• The new approach to SP
• from ex-post poverty to ex-ante vulnerability
• new conceptual framework Social Risk Management
• Strategic implications
• as a sector but also as a theme
• from intervention-based to risk-based definition
• Implementation of the SP agenda in the Banks
  work
• strategic directions for the Regions
• analytical and advisory services (example of VA)
• lending operations
• knowledge and capacity enhancement (WBI)

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Strategic ImplicationsSocial Protection as a
Theme

• SRM emerges as a theme giving SP an advocacy and
  analytical role in other sectors
• Addressing national shocks (economic crisis,
  natural disasters, civil strive)
• Financial markets
• Infrastructure investments (such as roads)

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Social Protection as a Theme Vulnerability
reducing potential of interventions

• From a VA in rural Kenya (panel 1994-1996)
• A 10 reduction in Malaria incidence would
  increase Hhold income by 30 to 40
• Access to markets (30 min.) would increase Hhold
  income by 10 to 20
• Adult literacy (75) would increase Hhold income
  by some almost 20

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Strategic ImplicationsSocial Protection as a
Sector

• Extending the traditional reach (and
  definition)of SP
• Informal and market-based arrangements
• Gender focus and lens
• Rethinking public interventions
• Strengthening risk reduction, e.g.
• Providing equitable and inclusive labor markets
• Fostering risk mitigation, e.g.
• Old age income security Non-contributory schemes
• Improving risk coping, inter alia
• How can coping assistance help with risk
  mitigation and reduction?

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Strategic Implications From intervention-based
definition..
Social Protection Labor Market
Interventions LM regulation LM programs
(active/passive) Wage setting Social
Security Social Insurance 9 contingencies
a la ILO Social Safety Nets/Social Assistance
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Strategic Implications .to objective/risk-based
definition

• Social Protection is defined as instruments
  to
• assist individuals, households, and communities
  better manage risk, and
• provide support to the critically vulnerable

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Outline

• Poverty Reduction and emergence of SP in the Bank
• from dealing with the symptoms to attacking the
  causes
• The new approach to SP
• from ex-post poverty to ex-ante vulnerability
• new conceptual framework Social Risk Management
• Strategic implications
• as a sector but also as a theme
• from intervention-based to risk-based definition
• Implementation of the SP agenda in the Banks
  work
• strategic directions for the Regions (ex. of
  Africa
• analytical and advisory services (ex. of VA)
• lending operations
• knowledge and capacity enhancement (ex. of WBI)

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Prevalent Source of Risks by Region
 
 
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Scope for SP Instruments by Region
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Climate Shocks
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Conflict and Post-Conflict
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Terms of Trade Shocks
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AIDS ( of Ages 15-49)
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Malaria cases ( of population)
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Total Shocks
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Risk and Vulnerability Assessments

• From 3 in 2000 (Argentina, Uruguay, Dominican
  Republic)
• To 10 in 2001 (Jamaica, Mexico, Mali, Indonesia,
  Philippines, Thailand, Korea)
• To 23 in 2002 (Colombia, Guatemala, El Salvador,
  Honduras, Ethiopia, Kenya, Nigeria, Kirghiz
  Republic, Russia, Turkey, Bangladesh, China,
  Pakistan)

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Risk and Vulnerability Assessment 2002
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Social Protection in World Bank Lending

• Level of World Bank lending in the SP sector
• - From US 240 million in FY94 to estimated 2
  billion in FY03
• - 40 of the total lending in the Human
  Development sector (average between 1997-2001)
• - 10 of the total lending portfolio of the
  World Bank in 2001

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Total SP Lending 1990-2003 (in
by Region)
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Average Share of Lending Between the 3 HD
Sectors (1997-2001)
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Social Protection in WBI
FY1999
FY2001
FY2002/03
FY2004/05

• Social Funds
• Pensions
• Social Policy Reforms In Transition Economies
  (SPRITE)

• Core courses and policy services in
• social safety nets
• labor market policies
• pensions reforms
• Social funds

• Country focus through action-oriented and skills
  enhancing activities in key SP areas
• Mainstreaming of
• SRM RVA in Bank Op.
• SP in PRSP
• gender in SP

• Country focused through multi-year
  programming as part of the overall Banks country
  program offered as a package of investment,
  AAA/ESW and capacity building.

To action-oriented and country focused
learning programs
To a fully integrated multi-year Bank package
To well-articulated learning programs anchored
by core courses
From individual Activities
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Outline

• Poverty Reduction and emergence of SP in the Bank
• from dealing with the symptoms to attacking the
  causes
• The new approach to SP
• from ex-post poverty to ex-ante vulnerability
• new conceptual framework Social Risk Management
• Strategic implications
• as a sector but also as a theme
• from intervention-based to risk-based definition
• Implementation of the SP agenda in the Banks
  work
• strategic directions for the Regions (ex. of
  Africa)
• analytical and advisory services (ex. of VA)
• lending operations
• knowledge and capacity enhancement (ex. of WBI)

42
International Symposium solidarity et social
protection in developing countries

• Security for the Poor Social Protection as
  Social Risk Management
• Turin, April 23-25, 2003
• Azedine Ouerghi

43
(No Transcript)