World Bank advises government to invest more in social protection

The World Bank has advised Ugandan government to do more investment in human capital development, saying it is important to invest in children and youth to raise living standards.

Presenting the fourteenth Uganda Economic Update report themed, “Strengthening Social Protection Investments to Reduce Vulnerability and Promote Inclusive Growth”, at Kisawa health centre, on Thursday, the World Bank senior economist social protection, Ms Ramya Sundaram said Uganda needs to expand social protection to support investments in human capital and to protect against shocks, focus social protection programmes on improving both resilience and economic opportunity.

“Almost half of Uganda’s population is younger than 15 years of age… …and the population is expected to be above 80 million between 2040 and 2050. Uganda needs to urgently invest in human capital to improve productivity and living standards. In this environment, social protection has a role to play to ensure growth is inclusive,” she said.

Ms Ramya said there is need to prioritize social protection expansion to the most vulnerable people and areas to improve their standards of living.

He explained that social protection plays a great role in supporting households to invest in human capital through better nutrition and education for children, for building resilience against shocks such as droughts, mitigating risks to allow households to make long-term investment.

Income inequality affects economies and societies, with growing evidence that excessive inequality may be bad for growth. There are also concerns that inequality may dampen educational opportunities and social mobility.

Ms Ramya said social protection has a role to play in ensuring that no-one is left behind spelling out that when considering expansion of social protection expansion it is important to prioritize areas with the lowest levels of human capital…

“Social Protection, is about investment in Human Capital, Protection against shocks, Direct Income Support Programmes, Nutrition sensitive, safety nets, support to early childhood education, Traditional Social Insurance Programmes, Voluntary Savings Schemes, Agricultural Insurance Programmes

Ugandan government has social protection programme in place which caters for the elderly whereby they are given some money per month and it is now in a number of districts.

Ms Ramya said despite low coverage, social protection programmes have had important positive impacts revealing that this has resulted in savings of Shs9.6 billion in emergency funds in FY16/17.

“Since the inception of Adaptive Social Protection programmes that respond to drought-related disasters, no food security crisis has occurred in the Karamoja sub region. Poverty has come down in northern Uganda, while it has increased in other parts of the country.”

“The SCG has a positive impact on the wellbeing of pensioners and other household members – there is a 33 per cent increase in average household expenditure among recipient households,” she added.

She further noted that the government has articulated a vision for social protection, the National Social Protection Policy was published in 2015 and lists Social Protection as a key component for achieving inclusive growth. The policy clearly defines social security as having two elements; direct income support, and social insurance.

The World Bank stated that evidence shows that social protection programmes can provide an answer to some of these challenges. Expanding social protection could have positive impact on growth and would provide social safety nets to reduce vulnerability to shocks, build equity, and maintain high labour productivity.

“Two out of three people who get out of poverty fall back in – that is about 1.4 people in the last household survey conducted in 2016. We need to consider the importance of investing in people, building their human capital, and providing them with the tools and assets to manage shocks and reduce their vulnerability,” said Tony Thompson, Country Manager, World Bank.

In another development, the World Bank said despite the potential that social protection initiatives offer, the Senior Citizens Grant (SCG) and the Northern Uganda Social Action Fund (NUSAF) – the two main social protection programs reach only 3 per cent of the population compared to 6 per cent in Kenya. The Government of Uganda spent 0.14 per cent of GDP (FY17/18) on the two programs, less than Kenya and Rwanda at 0.4 per cent and 0.3 percent of GDP, respectively.

The World Bank said the coverage and spending on these types of initiatives in Uganda is not optimal, based on regional and global comparisons. There is therefore a strong case to be made to expand these programmes, and to consider how to reach different vulnerable groups.

“Simulations show, for example, that programmes covering the poorest 50 per cent of households with infants under 2, would cost an estimated 0.23 per cent of GDP, whereas similar programmes covering the poorest 50 per cent of all households with children under 5 would cost 0.50 per cent of GDP,” the World Bank said.

The secretary to the Treasury, Mr Keith Muhakanizi advised that instead of focusing on the older people as the report states, it better provide social protection to children.

“Shouldn’t we focus on the children rather than the old people,” he asked?

Mr Muhakanizi agreed with the World Bank that there is need to increase resource allocation for social protection via education, health and agriculture using agricultural insurance schemes and water for production. 

Key messages in the report are:

• Investing in social protection programs is important to support improvements in human capital Social protection programs provide a means for cost-effective support to people affected by shocks such as drought, floods, locusts.

• Given limited fiscal space, expansion of social protection in Uganda will need to be channelled to areas and people that need them the most.

• Given that drought risks predominate, and considering that households engaged in agriculture are most affected by such risks, agricultural insurance should be scaled up Provide fiscal incentives to improve the take-up of voluntary savings schemes by informal sector workers.

[email protected]