The rise of social protection in developing countries: new insights

by Leila Ali, ICSW

The rise of social protection in Global South countries has seen significant development in recent years, moving away from traditional food aid and subsidies towards more targeted and reliable forms of intervention. Through the provision of social assistance, social insurance, and labor market programs, today’s social protection systems strive to reduce (and prevent) poverty and vulnerability throughout the life-cycle. Social protection, including social protection floors, has been recognized in the 2030 Agenda for Sustainable Development as a vital tool contributing to a number of SDGs.

Social protection systems have notably expanded in low and middle-income countries. At the same time, however, it is estimated that more than half of the world’s population still lacks equitable access to social protection. In this context, a recent report to the Expert Group for Aid Studies (EBA), published in 2022, may be of great interest to the ICSW audience.1 Authored by a group of researchers, including Miguel Niño-Zarazúa, Ana Horigoshi, Alma Santillán Hernández, and Ernesto Tiburcio, the report distinguishes social protection systems as “nationwide policy portfolios aimed at protecting populations against life-course and employment-related hazards that threaten acceptable levels of well-being; supporting their productive capacity; and facilitating their full participation in society.” The diversification of social protection systems visible in many countries has been driven by a mixture of domestic contributions, such as economic growth and demographic changes, as well as external factors, including policy diffusion and foreign aid. This study analyzes the key determinants that underscore the recent expansion of social protection systems in the Global South regions, particularly in sub-Saharan Africa and the role of foreign aid in these recent dynamics. The report identifies a range of public measures across nine main areas, such as child and family benefits, unemployment support, and health protection. In this light, the report focuses specifically on interventions within non-contributory assistance, and thus, helps provide greater insight into the successes of these programs while also identifying the areas that need improvement.

1 EBA is a government committee mandated to independently evaluate and analyse Sweden's international development assistance.  https://eba.se/en/reports/20402/20402/

The devastating economic and social consequences brought about by the recent pandemic as well as ongoing regional military conflicts have revealed consequential gaps in access to social protection systems. Therefore, further expansion is needed in order to adequately protect marginalized communities and better prepare them for future responses to multiple crises.

Drawing on 1) statistical analyses of international aid to social protection, 2) a systematic literature review on the contributing factors of social protection expansion, and 3) an international comparative analysis that is based on advanced econometrics methods within the years 2000-2019, this study works to answer several critical questions. These questions focus on whether foreign aid has contributed to the development of social protection systems and under what methods and financial approaches, which factors have driven these processes, and what other underlying factors have either contributed to, or hindered, the recent evolution and expansion of social protection systems.

Despite the overarching goal of providing support to Global South regions, the range of donors and organizations involved have distinct preferences and approaches to the types of programs they create for beneficiaries. The study explores, for example, how the World Bank’s efforts in many poor countries are based on the goal of identifying and targeting specific populations that are in need. This can be seen in the promotion of their programs of conditional cash transfers (CCTs), social pensions, and public work programs. On the other hand, the UN approach emphasizes the importance of universal social protection systems provided to all members of society when needed. While the study does not explore the consequences of these contrasting approaches when influencing policy, they are important to consider when looking at recent shifts in social protection efforts.

Evidence from the report indicates that while bilateral and multilateral donor agencies merge their efforts through dialogue and the exchanging of ideas, policy agendas are more actively advanced by multilateral agencies due to their distinct corporate objectives and their more active relationships with national government and key stakeholders. On the other hand, bilateral donor agencies operate in a more decentralized manner, providing country officers with more autonomy in collaborating with counterparts and countries receiving aid. Together, multilaterals, such as UNICEF and the ILO, as well as top bilateral donors have impacted the expansion of protection systems by providing technical assistance, policy design, and advice regarding program implementation, monitoring, and impact evaluation.

In recent decades, social protection portfolios have included CCTs, social pensions, unconditional cash transfers (UCTs), and public work programs. These types of programs have become increasingly important due to the limited availability of applicable social insurance schemes in these regions. In many developing countries, UCTs have led the expansion of social protection systems. In Latin America and the Caribbean (LAC), CCTs have been the most widespread, followed by social pensions. In Asia and the Pacific region, UCTs, CCTs, and public work programs are all used to support vulnerable populations. The concentration of social protection aid in LAC is largely driven by multilateral agencies (such as the Inter-American Development Bank and the ILO), whereas the World Bank has been the largest direct contributor of financial resources towards social aid in sub-Saharan Africa over the last ten years. While the influence of donors and policy diffusion have had a considerably positive effect in LAC and Asia-Pacific regions, the report found that this relationship is much weaker in Africa.

Unsurprisingly, the pace at which social protection systems have developed and the types of programs that are adopted vary markedly across countries and global regions. The poorest countries face the largest deficits in coverage as well as limited financial and governmental capacity to implement such systems to scale. The report pinpoints the significant unequal distribution of social protection systems within sub-Saharan Africa when compared to other Global South regions. With just a handful of programs in place that reach over a million recipients, this region has the lowest effective coverage across marginalized populations, with only 15% of the population covered by at least one area of protection. As a result, these countries are disproportionately impacted and left without access to essential services of support and recovery. This situation can exacerbate recovery and beget greater social inequality and economic insecurity, which has serious implications for ICSW-led efforts and the advocacy and activities of other civil society organizations.

Overall, the study highlights the important role and positive contributions of foreign aid in the development of social protection systems in the Global South. Despite a positive trend in providing assistance to social protection programs, these programs still capture only a small fraction of total global aid budgets, with these trends being outpaced by more active donor assistance in sectors such as health and education.

In conclusion, this study emphasizes the importance of long-term sustainability of these systems. Building fiscal capacity coupled with improving tax collections will strengthen aid interventions and resource mobilization effort. From both a human rights and social justice perspective, expanding coverage of, and access to, social protection systems is crucial to ensure adequate standard of living and the realization of one's full potential and participation in society. The investments mapped out in this study can help developing countries secure and maintain the ability to administer effective and sustainable social protection programs that address poverty and inequality, promote inclusive growth and participation, and prioritize the opportunity for their citizens to have a healthy and full life.