People in developing countries are striving to improve their livelihoods in the face of multiple and growing risks, ranging from systemic shocks such as economic crises or natural disasters, to unemployment, disability, and illness. For them, institutions that enhance both their opportunities to escape poverty and their resilience to crisis are essential. Key among these institutions is safety nets.
The recent food, fuel, and financial crises have highlighted the importance of effective social safety nets for reducing poverty and vulnerability. Growing evidence of the positive impacts of safety net programs in both low- and middle-income countries as diverse as Brazil, Ethiopia, Mexico, and Rwanda has helped place safety nets firmly on the development agenda. The World Bank supports sustainable and affordable safety net programs to protect poor people as a key element of long-term poverty reduction as well as during times of crisis.
The Bank supports country safety net programs that protect families from shocks, help ensure children grow up healthy, well-fed, and stay in school and learn, empower women and girls, and create jobs. In particular, the Bank’s Rapid Social Response (RSR) program is helping low-income countries build safety net systems to prepare for future crises.
Building safety nets is a key component of the Bank’s broader Social Protection and Labor Strategy, which includes expanding access to health and education, social insurance, pensions, financial services, and job opportunities. The strategy takes into account the need to manage risk and the long-term negative impacts of failure to protect households from irreversible shocks, and the role safety nets can play in moving people out of poverty. The Bank supports a diverse set of safety net interventions, ranging from cash transfers to labor-intensive public works to school feeding programs.
Bank financing for safety nets and other social protection and labor programs reached $11.5 billion in 83 countries over the past decade. In response to the triple wave of financial, food, and fuel crises, the Bank almost tripled its support for these programs from an annual average of $1.6 billion in 1998-2008 to an annual average of $4.2 billion in 2009-11.
Recent trends in low-income countries and fragile states include:
- Greater focus on job creation: Public works and workfare programs generate temporary jobs and income, particularly for low-skill workers, through labor-intensive infrastructure investments.
- Expanded use of cash transfers, particularly as know-how on effective payment systems and targeting is improved. Increased cash transfer activity has been especially prominent in post-conflict and fragile contexts.
- More support for early childhood nutrition and school feeding programs, including school meals, maternal-child food and vitamin supplements, and food rations.
- Increased emphasis on delivering results: Targeting, electronic payment systems, monitoring and evaluation, and governance are key building blocks for the success of safety net systems.
Safety net program results in International Development Association (IDA) countries have reinforced the role of safety nets in the overall development agenda. Results include:
- Ethiopia’s Productive Safety Net Program reaches about 7.6 million chronically food-insecure people or 8% of Ethiopia’s population, and is set to cover 8.3 million people by 2015. In response to the financial crisis, the PSNP supported more than 1.2 million new households.
- In Bangladesh, conditional cash transfer (CCT) stipends were provided for 850,000 girls for the 2008/2009 school year based on their enrollment/performance, and 500,000 school children ages 7-14 received educational grants.
- In 2008, the government of Pakistan launched an extensive social protection program, providing cash transfers to the most vulnerable households. Within ten months, the program had provided cash transfers to 4 million families.
- In response to the food price crisis in Liberia, the Bank has supported a Cash for Works Temporary Employment Program, providing more than 640,000 days of employment to more than 17,000 beneficiaries, from 2007 to present.
Safety net programs in Latin America and other middle-income countries have been scaled up in response to the financial crisis. Increasingly, the success of these programs is catalyzing new projects across the globe. Results include:
- Bank support to Mexico’s Oportunidades conditional cash transfer program benefits 5.8 million families; increases health, nutritional, and educational coverage and quality; and supports an increase in the number of children advancing from primary to secondary school and from secondary to high school.
- In February 2008, the government of the Philippines launched a CCT pilot with just 6,000 households, in response to the food crisis. With Bank support by end-2009, the program had 700,000 household beneficiaries nationwide, and would reach an estimated 2.3 million (out of 4.2-4.3 million poor families) by the end of 2011.
- In Brazil, the Bank-supported Bolsa Familia program covered 12 million poor households (about 25% of the population) by providing monthly payments to families that send their children to school, meet vaccination requirements, and utilize health services. This program has been instrumental in reducing poverty and inequality.