Government should invest more in social protection programmes

Monday February 24 2020

In the last household survey done by the Uganda Bureau of Statistics in 2016/2017, we saw a spike in poverty levels countrywide, from 19.7 per cent in 2006 to 21.4 per cent. Northern Uganda was the exception, with the number of poor people reducing from 43.7 per cent (2012/13) to 32.5 per cent.
At the time of the survey, the rise in poverty was attributed to the long drought that affected agricultural production and incomes in many households that depend on agriculture – a sector considered one of the most vulnerable to changes in weather patterns.
In Karamoja, a semi-arid area in the north-east of the country, in response to the drought, the Government of Uganda activated an innovative disaster risk financing (DRF) facility under the third Northern Uganda Social Action Fund (NUSAF3) funded by the World Bank and provided income support to households to grow crops, feed their livestock and engage in income-generation activities, saving Shs9.4b in government food relief the following year.
The success of the DRF facility, and the results we have seen under NUSAF3, currently reaching nearly 1.8 million beneficiaries across the 55 participating districts, underline the potential of social protection to reduce both poverty and insure households from shocks.
In our latest Uganda Economic Update, “Strengthening social protection to reduce vulnerability and promote inclusive growth” disseminated last Thursday, we show how these systems can help the poor find jobs, invest in better health and education of their children, and protect the aging population.
Uganda experienced strong economic growth in the 1990s and 2000s, but more recently, there has been a slowdown and the economy is now growing to 6.5 per cent – well below the double-digit growth required to propel the country to middle income status by 2030.
As a result, according to the Human Capital Index (HCI), a tool that measures the contribution of education and health towards the productivity of a country’s next generation of workers, Uganda is ranked among the countries in the lowest quartile of the HCI distribution, with an index slightly lower than the average for sub-Saharan Africa region and below what would be predicted by its income level.
A child born in Uganda today will be only 38 per cent as productive when she grows up as she could be if she enjoyed complete education and full health.
Many households in Uganda do not have the means to cope with shocks and these come in many forms: drought, irregular rain, serious illnesses, or accidents to the main income earners, which not only erode gains made in reducing poverty, but also sink households into further poverty.
Social protection programmes can support investments in human capital, reduce vulnerability to shocks, and help drive inclusive economic growth. Programmes that direct support to poor households with children and the youth, offer the highest returns in face of a predominantly young and rising population.
The current coverage and design of social protection programmes are insufficient to meaningfully address the range and scope of vulnerabilities in Uganda. The two main government programmes, NUSAF 3 and the Senior Citizen Grant (SCG), reach only three per cent of the population – which is very low given the needs in the country. In neighbouring Kenya, similar programmes reach more than six per cent of the population.
Secondly, financing to the sector is limited. Spending on the two major programmes amounted to about 0.14 per cent of GDP in FY17/18, which is lower than neighbouring countries like Kenya and Rwanda, which spend 0.4 per cent and 0.3 per cent of GDP, respectively.
Our simulations show, for example, that programmes covering the poorest 50 per cent of households with infants under two, 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 five would cost 0.50 per cent of GDP. Such an investment would reduce poverty by two per cent. To better lessen shocks, the design of social protection programmes could consider the nature, frequency and geographical location of large-scale shocks.
Given government’s budget constraints, we recommend better targeting of social protection and focusing it on the most vulnerable in the neediest geographical areas. In our report, we also recommend scaling up existing DRF pilots to better prepare for drought and mitigate other shocks, including the agricultural insurance pilot scheme to cushion farmers from losses incurred due to climate and other natural disasters.
Picking up life after a disaster or crisis can be daunting and for some life-changing as witnessed in the aftermath of the flooding in Kasese in western Uganda, or the resettlement of people affected by mudslides in Bududa in eastern Uganda. But social programmes like NUSAF or the SCG have shown that with good programming, and resource prioritisation, government and development partners can help where community and family support systems are fragile or broken.

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