Financing and Sustainability of Social Protection
Charles Lwanga-Ntale is the regional director for Africa Development Initiative. He has carried out extensive research on Social Protection, chronic poverty, disability and development and community participation.
Shifa Mwesigye talked to him about Social Protection and its feasibility in Uganda during the Conference on ‘Financing Social Protection in East and Central Africa’ held at Lake Victoria Serena Hotel, Lweza and organized by Economic Policy Research Centre (EPRC)
Qn. What is social protection and why should countries have social protection programs?
Social protection is policies or programs, which help people, avoid the negative impacts of shocks and help them to bounce back when these shocks strike.
For example when a breadwinner dies in a family, the family needs to be protected against sinking into poverty or if they are already in poverty from becoming more deeply poor or destitute.
Countries must have social protection because human beings must live a life of dignity and should not be allowed to descend into destitution. Secondly, it is an economic imperative. Investment in social protection helps to build various assets including human assets such as education and health. By investing in these assets a country will be able to prevent its citizens from becoming intergenerational poor.
By this, I mean to avoid passing on poverty from one generation to another. So if we want to break the cycle of poverty we need to invest in social protection.
Thirdly, social protection helps to build a positive relationship between citizens and the state. If taken from a holistic point of view it is a key factor in the promotion of education outcomes, health and others.
Qn. What is the situation with social protection in Uganda and who is benefiting from it?
So far, social protection uptake in Uganda has been extremely low. The main beneficiaries at the moment are only those people who are involved in formal employment through schemes such as the National Social Security Fund (NSSF) and other contributory schemes including insurance. Just about 5% of Ugandans benefit. There are a few other people between 3%-5% receiving social protection support but this category is not continuously supported because many of the programs are run on a short term basis.
Qn. Who should finance social protection and how can it be sustained after donors have left?
There are three issues about financing and the first is that there are numerous small projects currently funded by government in terms of poverty eradication, vulnerability focus, targeted projects, which are not holistic in nature. They are not harmonized and they all come with administration costs. Some are administered directly by the president’s office and others by respective ministries, some by donors and some by NGOs. The first task is to be more efficient with existing resources.
Two, it is not either we spend on this and avoid other areas or visa vie. The cost of not investing in social protection is much higher than the cost of spending on it. The amount of money, which is lost in treating diseases, could be avoided. Skills which young people could have achieved and obtained or livelihood activities are huge and that estimate has not been worked through quite well. It would be helpful if someone were to compute the cost of not investing in social protection. This is not to mention crime related costs, disease which would have been avoided and despondency. We need to build hope among citizens so that they can build onto what they have.
Thirdly, is the question of where the financing should come from? The source has to be a combination of opportunities from domestic, private, donor resources and remittances. Together, these resources need to be creatively utilized for dealing with issues of risk and vulnerability. Small holder farmers for example are currently not able to invest in high yielding varieties because they are trying to minimize risk. If a social protection instrument such as weather indexed insurance could be introduced, that would enable farmers to take more risks and increase the potential for yields while protecting the farmers from falling off if their investment doesn’t work.
Qn. In many developed countries, part of the taxes collected by government is used to fund social protection. Can this funding model work in developing countries?
Of course yes it would. In many of those countries where taxation has been used as the main means of pulling together resources, there has also been a high level of accountability and trust between the state and citizens. Contrary, to what people say, I don’t think the main issue is level or taxation. Many people would be happy to pay more tax provided there is returns and accountability. What people detest is paying little tax if they cannot see accountability of their money.
Qn. Many people are saying that the oil money can be used to fund social protection, how will this work? Where else is it done successfully?
I think newly found natural resources like oil present a good opportunity if the resources are widely used. First, is by ensuring that a public fund is created and the operations of that fund are transparent so everyone knows what is going on.
Secondly, the revenues from oil could be split in three ways. First as a long term investment where funds are kept for future generations. The second one is involving citizens in a public company where shares can be bought or combined with resources so that people can reap directly from proceeds of oil through dividends.
Thirdly, to directly fund poverty eradiation especially at household level. The long term development resources can also be split two ways- some for investment in infrastructure and others for posterity. The idea for oil revenues being used is a very good idea but I think we need to think beyond what is happening just here in Uganda. At the moment the discussion is narrowly focused on what will happen in Uganda. We need to widen it with integration in the East African country. We should apply greater thinking on how social protection might work and prioritize it across the East African Community (EAC) so that there is a minimum set of values and standards across the countries of the EAC. There are lessons to learn from Rwanda and South Africa.
Qn. What is the way forward after this conference on “Financing Social Protection in East and Central Africa’?
I think the first is the point made by Dr Suruma. There is a need to increase awareness especially among politicians and policy makers. The best way to do this is to empower communities so that they hold their local and national leaders accountable for decisions on poverty eradication, on protecting the poorest through social protection.
At country level, we need to discuss and reflect on how the post 2015 agenda is being developed. This requires partnership between Uganda and the global partnership including the UN system, OECD. The point is about getting the global community to engage in partnership not by offloading what should be done but having a conversation with countries in the south.
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| Charles Lwanga-Ntale speaking at the conference |
Shifa Mwesigye talked to him about Social Protection and its feasibility in Uganda during the Conference on ‘Financing Social Protection in East and Central Africa’ held at Lake Victoria Serena Hotel, Lweza and organized by Economic Policy Research Centre (EPRC)
Qn. What is social protection and why should countries have social protection programs?
Social protection is policies or programs, which help people, avoid the negative impacts of shocks and help them to bounce back when these shocks strike.
For example when a breadwinner dies in a family, the family needs to be protected against sinking into poverty or if they are already in poverty from becoming more deeply poor or destitute.
Countries must have social protection because human beings must live a life of dignity and should not be allowed to descend into destitution. Secondly, it is an economic imperative. Investment in social protection helps to build various assets including human assets such as education and health. By investing in these assets a country will be able to prevent its citizens from becoming intergenerational poor.
By this, I mean to avoid passing on poverty from one generation to another. So if we want to break the cycle of poverty we need to invest in social protection.
Thirdly, social protection helps to build a positive relationship between citizens and the state. If taken from a holistic point of view it is a key factor in the promotion of education outcomes, health and others.
Qn. What is the situation with social protection in Uganda and who is benefiting from it?
So far, social protection uptake in Uganda has been extremely low. The main beneficiaries at the moment are only those people who are involved in formal employment through schemes such as the National Social Security Fund (NSSF) and other contributory schemes including insurance. Just about 5% of Ugandans benefit. There are a few other people between 3%-5% receiving social protection support but this category is not continuously supported because many of the programs are run on a short term basis.
Qn. Who should finance social protection and how can it be sustained after donors have left?
There are three issues about financing and the first is that there are numerous small projects currently funded by government in terms of poverty eradication, vulnerability focus, targeted projects, which are not holistic in nature. They are not harmonized and they all come with administration costs. Some are administered directly by the president’s office and others by respective ministries, some by donors and some by NGOs. The first task is to be more efficient with existing resources.
Two, it is not either we spend on this and avoid other areas or visa vie. The cost of not investing in social protection is much higher than the cost of spending on it. The amount of money, which is lost in treating diseases, could be avoided. Skills which young people could have achieved and obtained or livelihood activities are huge and that estimate has not been worked through quite well. It would be helpful if someone were to compute the cost of not investing in social protection. This is not to mention crime related costs, disease which would have been avoided and despondency. We need to build hope among citizens so that they can build onto what they have.
Thirdly, is the question of where the financing should come from? The source has to be a combination of opportunities from domestic, private, donor resources and remittances. Together, these resources need to be creatively utilized for dealing with issues of risk and vulnerability. Small holder farmers for example are currently not able to invest in high yielding varieties because they are trying to minimize risk. If a social protection instrument such as weather indexed insurance could be introduced, that would enable farmers to take more risks and increase the potential for yields while protecting the farmers from falling off if their investment doesn’t work.
Qn. In many developed countries, part of the taxes collected by government is used to fund social protection. Can this funding model work in developing countries?
Of course yes it would. In many of those countries where taxation has been used as the main means of pulling together resources, there has also been a high level of accountability and trust between the state and citizens. Contrary, to what people say, I don’t think the main issue is level or taxation. Many people would be happy to pay more tax provided there is returns and accountability. What people detest is paying little tax if they cannot see accountability of their money.
Qn. Many people are saying that the oil money can be used to fund social protection, how will this work? Where else is it done successfully?
I think newly found natural resources like oil present a good opportunity if the resources are widely used. First, is by ensuring that a public fund is created and the operations of that fund are transparent so everyone knows what is going on.
Secondly, the revenues from oil could be split in three ways. First as a long term investment where funds are kept for future generations. The second one is involving citizens in a public company where shares can be bought or combined with resources so that people can reap directly from proceeds of oil through dividends.
Thirdly, to directly fund poverty eradiation especially at household level. The long term development resources can also be split two ways- some for investment in infrastructure and others for posterity. The idea for oil revenues being used is a very good idea but I think we need to think beyond what is happening just here in Uganda. At the moment the discussion is narrowly focused on what will happen in Uganda. We need to widen it with integration in the East African country. We should apply greater thinking on how social protection might work and prioritize it across the East African Community (EAC) so that there is a minimum set of values and standards across the countries of the EAC. There are lessons to learn from Rwanda and South Africa.
Qn. What is the way forward after this conference on “Financing Social Protection in East and Central Africa’?
I think the first is the point made by Dr Suruma. There is a need to increase awareness especially among politicians and policy makers. The best way to do this is to empower communities so that they hold their local and national leaders accountable for decisions on poverty eradication, on protecting the poorest through social protection.
At country level, we need to discuss and reflect on how the post 2015 agenda is being developed. This requires partnership between Uganda and the global partnership including the UN system, OECD. The point is about getting the global community to engage in partnership not by offloading what should be done but having a conversation with countries in the south.
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