In recent years, we’ve seen sweeping change across the world’s economies; formal systems have broken down and become informal. My home region of South Asia is no exception: more than 90 percent of the workforce is made up of informal workers—street vendors, home-based workers, construction workers and smallholder farmers, many of whom aren’t certain of their incomes from week to week.
The stories of two families in a new video produced for the Spring Meetings illustrate how safety nets can change lives.
‘Social protection for inclusive development’ is a timely topic. The G20 ‘Seoul Development Consensus (2010)’, identified growth with resilience as a key pillar. Furthermore, the recent prevailing uncertainty (economic, political and environmental) reinforces the needs for measures, such as social protection, to both safeguard as well as promote development. More broadly, a consensus is emerging that social protection is an important instrument in supporting progress towards inclusive growth and the Millennium Development Goals (MDGs), especially in those situations (covariate shocks, imperfect markets) where remittances and other private safety nets might be insufficient (see Nyarko).
The session Social protection for inclusive growth (based on contributions to the European Report on Development 2010) reviews new generation programmes, emphasising reasons for success and failure. It highlights the features which make social protection possible, affordable and feasible even in low-income countries. Evidence presented shows that social protection programmes can mitigate risks and reduce chronic poverty and vulnerability without producing significant distortions or disincentives (Klasen on South Africa). Besides South Africa and the well known cases of Brazil, Mexico, other recent programmes have been effective in reducing poverty and inequality (cf Table 1 and ERD 2010 for evidence).
The Bank said today it is mobilizing over $7 billion for health and education to help poor countries battle threats to their social services during the crisis. The new health and education numbers follow an announcement earlier this week that its investments in social protection programs, including social safety nets, are expected to rise dramatically for 2009-2010 to $12 billion.
As part of this announcement, the Bank released a report titled, Averting a Human Crisis During the Global Downturn, which examines how previous financial downturns affected countries’ social protection programs.
Crisis Can Affect Social Services Programs
Evidence from previous crises in Argentina, Indonesia, Thailand, and Russia shows that governments were forced to cut health services as a result of shrinking budgets and that returning health spending to pre-crisis levels took up to 10-15 years to achieve, according to the report.
"We cannot afford a 'lost' generation of people as a result of this crisis," said Joy Phumaphi, the World Bank's Vice President for Human Development and former Health Minister for Botswana. "It is essential that developing countries and aid donors act now to protect and expand their spending on health, education and other basic social services and target these efforts to make sure they reach the poorest and most vulnerable groups."
AIDS Treatment Programs in Jeopardy
The report also warns that according to preliminary findings from 69 countries, which offer treatment to 3.4 million people on antiretroviral treatment (ART), suggests that 8 countries now face shortages of antiretroviral drugs or other disruptions to AIDS treatment. Twenty-two countries, home to more than 60 percent of people worldwide on AIDS treatment , expect to face disruptions over the course of the year.
"We cannot afford a 'lost' generation of people as a result of this crisis," Phumaphi said. "It is essential that developing countries and aid donors act now to protect and expand their spending on health, education and other basic social services and target these efforts to make sure they reach the poorest and most vulnerable groups."
Speaking at a news conference this morning ahead of the start of the World Bank/IMF Spring Meetings, Bank President Robert B. Zoellick hit on the need to address the second and third waves of economic fallout being felt in developing countries.
“First and foremost we need to ensure that we don’t repeat the mistakes of the past. When financial crises hit Latin America in the 1980s and in Asia in the 1990s…basic health, nutrition and education budgets were cut back severely. This time we must ensure that governments can protect targeted social expenditures and finance effective safety nets,” Zoellick said.
Nor can infrastructure be neglected, he said, citing the long-term negative consequences of slashing infrastructure investment during past crises. To help promote investment in roads, electricity, telecommunications, etc.--as a means of creating jobs and spurring economic growth--Zoellick said the Bank is planning a massive infrastructure initiative, to be formally launched on Saturday.
Zoellick also highlighted the Bank’s plans to boost support for agriculture—increasing lending from $4 billion in 2008 to $12 billion over the next two years to help ensure food security.
- Statement: Investments in safety nets, infrastructure needed to support poor in crisis
- Release: Bank to Invest $45bn in Infrastructure
- Story: Food Crisis Not Over for Many Poor People
- Webcast: IMF Webcast of Press Conference
Watch President Zoellick's opening remarks at the news conference below:
In light of the global economic crisis, the World Bank announced today that its investments in safety nets and other social protection programs in health and education are projected to triple to $12 billion over the next two years.
Additionally, the Bank also increased its fast track facility for the food price crisis to US$2 billion from US$1.2 billion. As World Bank Group Managing Director Ngozi Okonjo-Iweala explains:
"The continuing risky economic environment, combined with continuing volatility for food prices, means for poor people the food crisis is far from over. Many poor countries have not benefitted from some moderation of food price spikes in global markets. The decision to expand the facility will help ensure fast track measures are in place for continued rapid response to help countries."
More information about today's announcements: