In the last two decades, the Middle East and North Africa has witnessed substantial economic growth, with mixed results and limited trickle-down. With the economic effects of the Arab Spring taking their toll on the region and the resulting increase in demand for a new social contract, it has become vital for governments to create programs that alleviate poverty and increase resilience to economic shocks.
The World Bank recently completed a regional report on Social Safety Nets (SSNs) in the MENA region entitled ‘Inclusion and Resilience: the Way Forward for Social Safety Nets in the Middle East and North Africa.’ To highlight the report’s findings and suggest recommendations for governments to improve their SSN programs, the Carnegie Middle East Center and the World Bank co-hosted a discussion with Victoria Levin, an economist at the World Bank’s Human Development Department and the report’s co-author, and Haneen Sayed, coordinator of the World Bank Human Development Program in Syria, Lebanon, and Jordan. Carnegie’s Ibrahim Saif was a speaker and moderator.
Preparation of the Report
Preparing the report was an inclusive process, according to Sayed, with participatory consultation workshops in Beirut, Tunisia, and Muscat. It was based on existing and new household micro-data collected in twelve MENA countries, including three surveys:
- Social Protection, Evaluation of Attitudes, Knowledge, and Support (MENA SPEAKS): This survey conducted by Gallup and focusing on Lebanon, Jordan, Egypt, and Tunisia, asked citizens what they think and want from SSNs and what they know about them.
- Jordan Gives: This behavioral experiment sought to explicate the preferences of Jordanian citizens for the design of different SSN programs.
- Regional Survey: This data collection effort was designed to gather new administrative data about existing SSN programs in twelve MENA countries.
The Role of Social Safety Nets
SSNs are non-contributory transfers that target the poor and vulnerable. They can include income support, temporary employment programs, and services that can build human capital such as training programs and micro-finance. Levin explained that SSNs promote three important outcomes: social inclusion, improved living standards, and resilience against economic shocks. She added that SSNs alleviate vulnerability and poverty by decreasing the effects of negative shocks on the poor and the marginalized. Without SSNs, poor households could sink deeper into poverty and low-income families could be more severely affected by economic shocks, she explained.
Challenges of SSNs in MENA
Levin argued that the main challenges to the success of SSNs in the MENA region are threefold:
- Poverty: Poverty among children is very high, with as many as a third of children living below the poverty line in Yemen, for example. Furthermore, poverty in rural areas is much worse than in urban areas, with levels sometimes twice as high.
- Education and Benefits: The region’s low education levels are a major challenge, with only 22 percent of children being enrolled in pre-primary education. Additionally, most of the region’s poor work in the informal sector where they are not well paid and don’t receive basic employment benefits.
- Social Exclusion: Restricted access to job opportunities and social services means that some groups, such as women, the disabled, and the displaced, are being excluded socially.
The Current State of SSNs in the MENA Region
- Inefficiency: A number of SSN programs focus on fuel subsidies, which are inefficient and favor the rich, Levin said. For example, in Egypt 60 percent of subsidies go to the top quintile of the population. In addition, the majority of SSNs come in the form of income transfers, which are costly and socially exclusive. Alternative SSN programs, such as conditional and non-conditional cash transfers, should be developed and adopted, Levin added.
- Inconsistency: There is much diversity among SSNs in the region. For example, Iraq and Syria have very few non-subsidy SSN programs, while Jordan and Morocco have more than ten. The average coverage rate of SSN programs in the West Bank and Gaza is 50 percent, but less than 30 percent for the majority of other countries in the MENA region. As a result, many do not receive social aid, Levin said.
- Poor Targeting Methods: Countries in the region use two different targeting methods. The first targets specific sections of society such as orphans, the disabled, and women. The second targets certain regions and has been shown to work well if poverty levels are concentrated in certain areas rather than scattered throughout the country. However, Levin pointed out that SSNs in the region are generally regarded as being poorly targeted and insufficiently generous.
SSNs in Lebanon
Lebanon currently has eight non-subsidy programs concentrated on education and health and one SSN, the National Poverty Targeting Program (NPTP), based on individual assessments, Levin said. The NPTP, which was recently launched in Lebanon, gathers data about Lebanese households and classifies them by degree of poverty, so that social aid reaches those who are most in need. The government has allocated $28 million in the 2011 budget as a benefit to be distributed to the poorest families based on the NPTP. Sayed explained that the principles of this project were:
- Equity: Every Lebanese citizen has the right to apply to and benefit from this program.
- Fairness and Transparency: The needs of every applicant should be assessed according to transparent and objective methodologies.
Despite this investment, data from the MENA SPEAKS survey in Lebanon indicate that twenty-two percent of Lebanese believe that the government is not effective in distributing help. Eighty-four percent of Lebanese want SSNs to target the poor, and 66 percent would prefer to receive SSNs as cash instead of food or clothing.
Reform Agenda of SSNs in the MENA Region
Levin summarized the reform agenda for SSNs:
- Improving Impact: Investing more in human capital would encourage social inclusion of the poor and vulnerable. Levin pointed to the Taysir program in Morocco as a good example.
- Reliability and Flexibility: A reliable and flexible SSN infrastructure that runs effectively during booms and recessions is crucial. This can be done, Levin said, by creating unified registries of beneficiaries as well as utilizing effective service delivery mechanisms, such as smart cards.
- Consolidation: Governments must consolidate fragmented SSN programs by creating updated inventories for these programs, such as recent data about the poor. Levin added that linking between non-contributory and contributory SSNs is very important.
- Rebalancing Finances: Governments must rebalance financing for SSN programs in the MENA region. First, spending on non-subsidy SSNs needs to be increased and the coverage of those programs improved to target a larger proportion of the poor. Leakages that happen in the supply chain of subsidized goods should decrease and adjustments should be applied to the goods that are less sensitive to reforms.
Saif concluded the presentation of the report by arguing that the political environment in MENA countries has delayed the process of starting the reforms needed to solve problems of poverty and inequality. He argued that a road map was needed, in addition to finding a national champion to implement the suggested policies. This would include improving the institutional capacity within the government organizations responsible for social spending.