By the Blouin News Business staff

A global view on social safety nets

by in Global Economy.

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Social safety nets are programs comprising non-contributory transfers in cash or in-kind, designed to provide regular and predictable support to poor and vulnerable people. They have proven successful in many countries around the world as a way to help end extreme poverty and to promote shared prosperity. Implementing them remains a challenge in many parts of the world but the international community is taking big steps in that direction: now every country has at least one social safety net program in place — school food programs being the most prevalent type.

Where are the largest social safety net programs in the world being implemented? How many people benefit from them? Developing economies, and their citizens, grab the top spots as they have made an important push in implementing them there in recent years. However many people still don’t have access to them. A new World Bank report — The State of Social Safety Nets — sheds some light on the current situation. Here are some global conclusions we’ve found in the document:

  • Even though globally social safety nets are at the scale to cover most among 1.2 billion extreme poor (estimated to be living on less than $1.25 per day in 2010), only 345 million extremely poor people are in fact covered by them.
  • About 870 million people in extreme poverty remain uncovered for two reasons: First, there are still many countries (both low-income and middle-income) that do not have scaled-up social safety net programs. Second, many social safety nets may not specifically target the income-poor, but instead have other important objectives such as improving nutrition, protecting orphans, or providing old age security.
  • The overall amount spent on social safety nets globally $337 billion) is less than the volume of remittances inflows to the same group of countries (around $370 billion in 2012).
  • Richer countries spend more — 1.9% of GDP on average — than lower income countries, who spend around 1.1% of GDP. Considerable cross country variation exists, mainly due to factors such a the relative size of internal versus external finance, the scale of programs, or the relative generosity of the benefits.
  •  The five largest programs in the world account for almost half of global coverage, have a combined reach of over 486 million people. They are: India’s National Rural Employment Guarantee Scheme, India’s School Feeding Program, China’s Di Bao, Brazil’s Bolsa Familia and Programa Nacional de Alimentação Escolar.
  • General price subsidies often represent the main form of social safety nets as in several countries in the Middle East and North Africa, which spend significantly more on fuel subsidies (i.e., over 4% of GDP on average) than on social safety nets programs (around 1% of GDP).

These are some of the main themes in the report, which “begins a series that will monitor and report on social safety nets in developing countries.” Social safety nets have been a key part of development goals and it’s widely expected that they will occupy a central role in the post-2015 global development agenda. The report signals one important assignment: more research might be needed on the performance of alternative design and implementation options, on linking social safety nets to the ‘graduation’ agenda, and on adapting social safety nets to different contexts, particularly urban areas and fragile states.

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