UKDC hearing

June 2022

UNDP is the development arm of the UN. We work on the ground with more than 170 countries and territories to expand people’s choices for a fairer, sustainable future, as envisioned by the 2030 Agenda for Sustainable Development with planet and people in balance.

UNDP defines social protection as “a set of nationally owned policies and instruments, organized around systems that provide income or in-kind support and facilitate access to goods and services to all households and individuals at least at minimally accepted levels, to (i) protect them from multiple deprivations and social and economic exclusion, as a matter of human rights and particularly during shocks or periods of insufficient income, incapacity or inability to work; and (ii) empower them by increasing productive capacities and enhancing capabilities”.

1. Role of social protection in creating routes out of extreme poverty? How easy to evaluate social protection impact?

• Social protection is an effective tool to promote economic and social inclusion and it is a key lever to reduce inequality and poverty, and address vulnerabilities. Social protection can provide both protection and promotion. By protecting people’s income and consumption streams, it can prevent harmful coping mechanisms that result in long term damage to human development eg. withdrawing girl children from school, poor eating and nutrition, and sale of productive assets. Going beyond transfers, social protection policies can ensure productive activities and secure livelihoods, in a world lashed by uncertainty, especially for the most vulnerable.
• This is recognized widely. In Our Common Agenda, the Secretary General noted that without the ramp up of state provided social protection in response to COVID-19, economic damage and damage to human lives could have been much worse. Related to the ‘value’ of social protection, it is important to see social protection as a smart investment (in protecting SDG gains, in promoting inclusion and prosperity, as well as a complementary policy to ensure just transitions to green economy, while addressing climate change), rather than as a handout. This also helps make the case for the financing of social protection.
• Experiences from countries validate this assertion. Following the shock from the pandemic and concomitant lockdowns, poverty rates were expected to double, as estimated by UNDP research. To prevent this, the government of Cambodia decided to extend its small, existing cash transfer system, to all 2.7 million people in the ID Poor system. Evaluations show that the estimated poverty setbacks were averted. In other examples, Nigeria is implementing large-scale cash transfers using innovative digitalized approaches. Kenya has done interesting work on informality and social protection led by UNDP Accelerator Labs. In Malawi, a large-scale green youth corps initiative (public employment scheme) aims to provide at least 2,000 youth aged 18 to 30 with employment opportunities for up to four months per year focused on environmental restoration of critical hotspot areas across Malawi. One of the key objectives of the Malawi Green Corps is to provide youth with employment and on-the-job technical training to address youth unemployment and create a pathway to green jobs. Rwanda has implemented e-governance solutions in a record time of two weeks. UNDP and ministry of ICT developed a Covid 19 Social Protection Food & Non-Food item tracking system to allow monitoring of receipts and target delivery of relief assistance to vulnerable population. In Cabo Verde, UNDP helped with the update of the Single Social Registry, with the number of beneficiaries having increased from 40,000 to 78,000.  
• However, it is true that the impact of social protection policies can be hard to evaluate quantitatively. These policies are not part of an experiment or an RCT. Instead, they are put in place to prepare for crises and adverse shocks, and sometimes reacting immediately to a shock.
• UNDP is conducting an independent evaluation of its support to social protection. The evaluation aims to provide evidence to promote organizational learning for improved effectiveness. It will examine the coherence, efficiency, relevance, effectiveness, and sustainability of the support of UNDP to social protection in programme countries. In that regard, UNDP is one of the unique actors that are able to link action on social protection in emergency and development contexts, creating resilience. 

2. How to design systems to identify and reach the most in need population groups?

• Social protection systems are articulated around programmes, platforms and institutions and are organized around contributory or non-contributory forms of income support; around social assistance, social insurance (contributory), and labour market interventions.
• UNDP supports universal social protection achieved progressively and with a combination of programmes – universal, targeted, contributory and non-contributory. Targeting and designing programmes for the most excluded is important to ensure that the right programmes reach those who need them most and to reach them first; this is especially important in the context of fiscal constraints. At the same time, broad or universal social protection policies would be more effective to reduce poverty and vulnerability in the long term.
• UNDP also has invested over the last years in the Multidimensional Poverty Index (MPI) to understand the multiple deprivations beyond income poverty. This renders our programming more tailored to varied needs of the vulnerable populations. In Honduras, UNDP had a decisive role supporting the adoption of a Multidimensional Vulnerability Index as a targeting mechanism to Bono Unico, an emergency cash transfer program adopted in the Covid-19 pandemic.  
• In designing systems, it is important to reduce inclusion and exclusion errors. When Cambodia expanded its cash transfer program using the ID Poor System, it also acknowledged large errors – many in need of the transfers were being missed. UNDP is supporting the government in the recalibration of the IDPoor system, for better targeting. UNDP, with support from the government of Australia, responded, providing the hardware, training, and technical assistance. The extended cash transfers system was put in place in a couple of months. More partners were brought on board along the way, including GIZ, World Bank and other UN agencies. The swift response was powered by 1,700 tablets supplied to the Ministry of Planning by UNDP that enabled the government to move from a paper based to an electronic system.
• Harmonizing different social protection programs and leveraging digital technology for single registries is key. It is important to ensure interoperability and cross-referencing of different databases including registries, and administrative databases. This ensures coherence and avoids a patchwork of social protection policies with limited coverage and effectiveness.
• The crisis has demonstrated the relevance of digitized IDs and social registries in facilitating the speedy identification and onboarding of new beneficiaries to social assistance programmes as was implemented in Mauritius, Peru, Brazil and Pakistan. Online portals and mobile platforms were also essential in reaching previously uncovered groups, especially the ‘missing middle’ of informal workers as was carried out in Egypt, Togo and Namibia[1]. Inclusion into social protection schemes can be connected to financial inclusion, with bank identity created during the process.
• At times digital solutions provide an alternative to ID based registration– mobile phone data patterns usage could be a proxy for poverty. In Togo, this is how the government targeted vulnerable groups- people who purchased phone cards with very small amount, had very limited phone usage, did not call abroad, did not use data or used it minimally, etc. Other alternatives to ID-based registration, such as reliance on voter’s database as in Togo or employees’ IDs as in Bangladesh ought to be adopted in countries with limited ID coverage to ensure that those without IDs can still be included.
• In the collection of applicant data, appropriate measures need to be taken to increase the capacity of national systems against cyberattacks, to ensure that data protection is in-place through updated privacy policies, clearly outlined regulations on what data is collected, how and by whom it can be used, stored, and disseminated.
• While online and mobile-based registration portals have been essential in enabling rapid identification of beneficiaries, the role of local actors, complementary mechanisms such as telephone registration, and social workers should not be overlooked. These actors facilitate the identification of the hardest-to-reach, as was achieved by grassroots organizations in Rwandan villages and local authority employees in Sri Lanka, and also enable the referral of households to benefit from more than one aspect of the social protection system.

3. How well were existing programs able to provide a basis for the pandemic response?

• The COVID-19 pandemic has led to an unprecedent and rapid global fiscal policy response with a view to providing the necessary support to the health sector, to workers, households and firms to cope with the negative socioeconomic impacts of the pandemic. COVID-19 shocks and the response demonstrated the value of social protection programmes in buffering and cushioning the negative social impacts on the population. Social protection policies have been a fundamental part of the fiscal response, being crucial to ensure compliance with containment measures and to mitigate the socio-economic impacts of the crisis, as noted in UNDP’s Next Practices report (UNDP 2021). There was considerable variation across countries in terms of the relative size of their fiscal policy response to the COVID-19 crisis. Low-income countries[2] had an average fiscal response of 1.8 per cent of the GDP - ranging from 7 per cent (Guinea Bissau) to as low as 1 per cent (Viet Nam and Myanmar), with an average of 1.8 per cent.
• Through the Covid-19 response, UN Country Teams, under the UN Resident Coordinators, and under the technical leadership of UNDP, have led the preparation of over 150 Socio-economic Impact Assessments (SEIAs) in 97 countries and five regions. A majority of these have translated into the UN Socio-Economic Response Plans (SERPs). The SEIAs enabled the UN to highlight multi-dimensional development challenges of COVID-19 and provide coherent policy advice to the Governments. In particular, these helped to elevate the need to strengthen national social protection systems and for longer-term systems building.
• UNDP researchers developed a “social protection response index” as a proxy of the breadth of the government instruments targeted at jobs or income support (UNDP 2022). The value of the index varies considerable across country groups showing that only developed countries were able to resort to a broad set of instruments.
• Looking at the breakdown of social protection by categories, social assistance measures were used universally, by countries across all income levels[3]. Social insurance and labor instruments were used more intensively by countries with higher income levels. In terms of creating new social insurance and labor market programs in Low Income and Lower Middle-Income countries, this was a missed opportunity.
• The most prevalent social assistance instruments utilised across all regions were emergency cash and in-kind transfers. Except for LAC, subsidies on food, utilities, housing and bills were also a very prevalent social assistance instrument, especially in Africa (UNDP 2021).
• Social assistance measures that had a coverage expansion mostly targeted poor and vulnerable households, vulnerable individuals such as children, elderly, persons with disabilities, refugees, and internally displaced person (IDPs). An important aspect of COVID-19’s social assistance response is a marked shift from targeting only the poorest to providing support for all affected individuals and especially to the ‘missing middle’. In Jordan, the inclusion of the working poor in social assistance programmes began with the introduction of the quarterly Supplementary Support Programme in 2018. The infrastructure for the Supplementary Support Programme including its application website, eligibility criteria, and benefit calculation were all utilised to introduce the Daily Wage Worker Cash Assistance Programme as a COVId-19 response. 
• The UNDP-UN Women COVID-19 Global Gender Response Tracker shows that only 18 per cent of social protection and labour market responses by Governments are gender sensitive.

4. What are the barriers that prevent the adoption of social protection systems by governments?

• Many countries still face significant challenges in closing social protection gaps and that social protection systems operate in a context of high, and sometimes growing, levels of informality and inequality, marked by limited fiscal space, institutional fragmentation and competing priorities, as well as climate change, digital transformation and demographic shifts. Gaps in the coverage, comprehensiveness and adequacy of social protection systems are associated with significant underinvestment in social protection, particularly in Africa, the Arab States and Asia.
• Fiscal space, short term – this is a major constraint. When a crisis hits, besides impacting health, jobs, and livelihoods, it also negatively impacts government budgets. While expenses on existing social protection programs increase, revenues dry up. This happened during the pandemic. Now, the world is reeling from the impacts of the war in Ukraine, including skyrocketing food and fuel prices. Once again, this puts immense pressure on fiscal expenses, which often include fuel subsidies.
• For example, a Temporary Basic Income given to 613 million women in the world’s developing countries could provide them with vital financial security -- preventing rising poverty and widening gender inequalities. However, the financing gap (the additional spending required to ensure at least minimum social protection for all) has increased by approximately 30 percent since the start of the COVID-19 crisis. To guarantee at least basic social protection coverage, low-income countries would need to invest an additional US$77.9 billion per year, lower-middle-income countries an additional US$362.9 billion per year and upper-middle-income countries a further US$750.8 billion per year. That’s equivalent to 15.9, 5.1 and 3.1 per cent of their GDP, respectively.
• Sustainable financing – the difficulty of providing or expanding social protection at the time of crisis underscores the need to put in place systems beforehand, i.e. shock responsive social protection systems. For this it is important to identify sustainable streams of revenue such as through the Integrated National Financing Frameworks (INFF)[4]. Increasing tax revenue and exploring debt relief options are crucial long-term measure to make permanent social protection expansion feasible. Countries in the Global South should focus their efforts on exploring innovative tax measures – mining and gas taxes, sin taxes, taxing the digital economy, and monotax. UNDP recommends putting perverse subsidies such as for fossil fuels and unsustainable food practices, and diverting the revenues towards social spending on health, education, and social protection systems (UNDP 2021).
• Informality and the ‘Missing Middle’ - The informal economy absorbs 8 out of every 10 enterprises in the world. This proportion is even higher in the developing world, reaching for example 9 among 10 enterprises in Africa. These are mainly unregistered small-scale units, often employing ten or fewer undeclared and low-skilled workers, including unpaid family workers. These businesses are outside the purview of government’s social security programs including social pensions, unemployment, disability, and health insurance.
• Capacity constraints, weak coordination mechanisms and partnerships – key parts of building systems, these can be strengthened through international support including South-South learning and knowledge sharing. Many innovations were seen during the COVID-19 response. Newly established Social Protection Emergency Response Committees were vital for planning and implementing responses. Policy design processes should be participatory, engaging different governmental levels as well as private actors, workers unions, NGOs, and civil society. Importantly, beyond emergency responses, the linkages to building systems and capacities must be made.
• Barriers at the micro and behavioral level also matter. For countries within Sub-Saharan Africa, some lessons learned from national responses to the Ebola crisis influenced the design and implementation of COVID-19 responses. Recognizing how humanitarian responses to Ebola side-lined women in what has come to be known as ‘tyranny of the urgent’ (Smith 2019), the government of Togo decided to pay women a higher benefit than male recipients in the country’s Novissi emergency cash transfer scheme for informal workers reaching over 12 per cent of the population. The decision to pay women a higher amount was based on Togo and West Africa’s past experience which showed that women carry a heavier burden than men and that they are more likely to utilise the money for the benefit of their children and their household.

5. What role can donor countries like the UK play to support the adoption of social protection systems?

Development partners like the UK play a vital role in the dynamic development of national social protection systems around the world. There are four areas of engagement that could support the successful expansion of inclusive social protection systems:

• The Secretary-General’s Our Common Agenda Report and the Secretary-General’s Policy Brief on Investing in Jobs and Social Protection call for the formation of a High-Ambition Coalition of countries as a vehicle to mobilize high-level political support for the jobs and social protection agenda, including in relation to the Global Accelerator on Jobs and Social Protection for Just Transitions launched at a High-Level Event on 28 September 2021. To be successful, the coalition must have the support of donors such as the UK.
• Support social protection programmes’ innovation through integrated programming and co-financing. Development partners can support government-led initiatives to tackle complex challenges with evidence-building pilots and integrated social protection solutions. UNDP has pioneered the “co-financing approach” to funding social protection’s linkages with other developmental sectors. This approach builds on the expanding evidence base documenting how integrated cross-sectoral responses and comprehensive approaches can effectively achieve complex outcomes while strengthening a range of other developmental outcomes, including tackling poverty and climate change, building human capital, supporting livelihoods engagement and broadly contributing to inclusive and pro-poor economic growth
• Ensure progressive expansion of governments’ social protection funding. Development partner assistance (i.e. budget support, programme support or structural adjustment finance) can provide vital funding for interim support and can finance better systems/information architecture and riskier innovations for which political will is still emerging.
• Building capacity for social protection policies, strategies, programmes and systems offers extraordinary potential for high value-for-money returns, sharing with evidence-building a global public good character. Development partners today can play a particularly important role in strengthening South-based capacity development initiatives, particularly in terms of building national capabilities for social protection capacity development. The interagency TRANSFORM programme is a good example.
• We need to make progress in key areas: a combination of additional concessional financing – which remains critical for the LDCs to safeguard macro-economic stability; timely debt relief; and transformative reforms to attract investments.

6. The UK is cutting its funding to the World Bank. Moving forward, it will prioritize bilateral funding. Is this the best approach to support poverty eradication?

• There is not definitive evidence on whether bilateral funding is more effective than multilateral funding. Multilateral aid has advantages in supporting development outcomes, conditionality of aid on development-supportive reforms, legitimacy to recipients, and specialization and expertise. Bilateral aid has other advantages due to its accountability, and institutional compatibility between donor countries and recipient. While multilateral aid is less fragmented, bilateral aid may minimize overall transaction costs.
• Bilateral partnership can be beneficial so long as it directly addresses some of the barriers identified above. In particular, looking at innovations, digitalization, building digital IDs, registries and interoperable systems, with national and local capacity and personnel to support these, is key.
• Supporting review of tax and subsidy structures and aligning these with SDG and national priorities is an area to focus.
• Ensuring Leave No One Behind (LNOB) and a universal approach to social protection, in line with SDG 1.3 is important.
• UNDP’s experience of working on the ground with more than 170 countries on growth and recovery enhancing programs means that it is uniquely positioned to support the UK in implementing development aid programs taking into consideration the differences between countries and regions, time periods, aid objectives, and maximize individual donor’s priorities. By doing so, UNDP can successfully influence the effectiveness of aid delivered bilaterally and multilaterally.

7. The graduation approach with multiple interventions that help get out of poverty. Is it the best approach?

•          UNDP and the Pardee Center for International Futures at the University of Denver show that integrated approaches, i.e. a combination of policy choices and investments in four key areas: (i) social protection, (ii) the green economy, (iii) digitalization, and (iv) governance – the key ingredients of an “SDG Push” – will be vital to achieve sustained and inclusive growth in years to come. To take just one example -- a simulation carried out by UNDP suggests that in Malawi, ranked 174th on the HDI, extreme poverty could substantially decrease by the year 2030 with the adoption of an SDG Push.

•          With UNDP’s support, many countries are exploring such policy options. Cambodia is working on linkages between social protection and employment, in particular, through the Graduation-Based Social Protection (GBSP) pilot project to enable extremely poor households to generate their own income streams by addressing the root causes of their economic exclusion through small cash support, asset transfer, behavioral change, and skill trainings.

•          UNDP is providing support to the government of Sri Lanka in the face of a major macroeconomic crisis. Besides expanded coverage of cash transfers, UNDP supporting income-generating initiatives that promote people’s capabilities and resilience.

•          The available graduation approach’s evaluations showed clear and sustained positive impacts on participants’ ability to “graduate” out of extreme poverty into sustainable livelihoods. As governments have gotten more and more interested in this, and because government staff often don’t have the time or appropriate skills, we have seen the introduction of technology in an effort to standardize the coaching and reduce the cost. These developments need to be carefully evaluated to make sure that when life skills coaching is replaced with technology the households don’t feel less sense of contact and engagement.

•          While the graduation approach has been successful in reaching out the extreme poor, it cannot be considered the only or best approach to combat poverty. UNDP social protection offer considers poverty a multidimensional phenomenon and as such even households who are not monetarily poor may fall into poverty for non-monetary factors, including food security, energy access, climate change, housing, health, education, and security. UNDP’s approach to lift 100 million people out of multidimensional poverty by 2024 focuses on three thematic policy areas: (1) Investing in responsive and accountable governance through collaborative work with those supporting the strengthening of social protection systems. (2) Strengthening resilience by developing social protection programmes that are shock-responsive and can be easily scaled up. (3) Promoting environmental sustainability by linking inclusive and gender-responsive social protection programmes to employment programmes and by supporting SMEs to make the transition to greener practices.

•          UNDP’s social protection services are designed to help preventing and mitigating social risks by enabling people to acquire new skills and be active on the labour market and by providing them with support during critical life course transitions (such as re-entering the labour market after studies, childbirth, unemployment or inactivity).

8. The recent International Development Strategy prioritises trade and investment. What risks and opportunities does this present for eradicating extreme poverty, and how can the UK Government ensure trade and investment is fair and inclusive?

• Trade and investment are considered integral engines for speeding up economic recovery from COVID-19 pandemic shock, besides holding many opportunities for progressing on national developmental goals including extreme poverty eradication. However, it is critical to consider how trade and investments are conducted and allocated (ideally to the most productive sectors of the economy) and what capacities are needed to have greater impacts on poverty, inequality and decent job creation, as growth does not automatically trickle down to the poorest.
• Limited economic diversification, poor access to trade finance and digital technologies are key vulnerabilities in developing countries that hinder their ability to deploy emerging international trade and investments opportunities. Trade can strengthen resilience to future shocks by enhancing productivity and growth and by increasing access to goods and services that shall help cope better with future shocks. Trade can also speed up economic recovery, for example, sustained foreign demand can help compensate reduced domestic demand. Despite these opportunities, vulnerable groups and sectors which lack adequate capacities are at extreme disadvantage, constraining the ability of trade and investments to act on poverty eradication.
• The UK Government can accelerate the role of trade and investment in economic recovery and in poverty eradication through providing support in, but not limited to, the following areas:

-          Support countries develop and implement national policies that encourage diversification of production and markets to increase resilience to external shocks. For trade and investment policies to have a key developmental role, policies need to be designed in a holistic way and developed in close coordination with other sectors. For example, upgrading exports requires efficient institutions, while promoting integration of firms in global and regional value chains necessitate conducive domestic environment.

-          Enhance SMEs’ competitiveness and their access to markets, especially green and innovative ones, as well as address trade finance gaps.

-          Support countries develop and implement strategies that promote stronger regional integration.

• In the specific context of Africa, the landmark Agreement Establishing the African Continental Free Trade Area (AfCFTA) open a new area of trade governance to undertake much needed structural reforms to support trade, investment and industrialization needed to create enough wealth across communities and contribute to reducing poverty in the continent. With Covid-19 impacts on the continent and the ongoing supply chains disruptions resulting from Ukraine war, Africa needs more than ever to diversify its economies and produce more of what it consumes – The AfCFTA, if effectively implemented, will contribute to this aspiration for the continent while creating business and job opportunities for its booming population. Evidence suggests that AfCFTA can lift more than 30 million of Africans out of extreme poverty while reducing wage gaps between women and men.
• UK as one of the long-lasting and trusted trade and investment partner of Africa has been providing financial and technical to support the AfCFTA process – from negotiations to implementation and monitoring at national, regional and continental levels. In March 2022, UK has committed £35m to the AfCFTA process.
• The recent International Development Strategy of UK which prioritizes trade and investment provides several opportunities to strengthen UK-Africa relationship including through continuing support to an inclusive AfCFTA, that benefits often marginalized businesses (small businesses including those owned by women and youth) and people, in general. Integrated African economies through the AfCFTA will drive diversification and recovery post-pandemic – an opportunity for UK to invest in Africa’s development while leveraging deal-making opportunities for investors. More integrated African markets are likely to boost regional value chains and local value retention across various sectors ranging from agro - processed foods, textiles, automobile, high-tech industries, financial services and transports, sectors in which UK has a lot to share with Africa in term of experiences, technical & financial assistance.

To ensure these opportunities yield fair and inclusive benefits for Africa, the following as critical:

• Focus on support Africa’s industrialization and digitalization programmes including greening its development path through a robust private sector in which MSMEs nurture and grow, through strong partnerships with UK private sector.
• Actively foster greater linkages between the UK investor and African private sector by exploring supplier relations so African firms can engage in learning-by-exporting (i.e. build productive capacities, and learn about higher UK standards requirements through peer exchange).
• Give specific attention to actions devoted to vulnerable economic actors including those who depend on the informal economy (e.g. small and medium sized businesses, especially those owned by women and youth). Innovative business development solutions focused on skills development, value chains and access to markets and finance would be critical to promote transformative change.
• On policy side, reconcile the inherently long-term quest for development with short term programmes and projects, ensuring ownerships of projects and programmes with established joint UK-Africa mechanism to achieve come-on goals.
• There are also risks associated with UK prioritizing bilateral partnerships in the context of AfCFTA which is an integrated development agenda for Africa. There will be a need to balance bilateral partnership with an integrated framework around UK-Africa relationship.