How a nation can own its social protection strategy: the Case of Mozambique

In Mozambique, there are plans for substantial increases in cash transfers, as the government attempts to fulfil its progressive social protection strategy approved last year, writes Joe Hanlon.

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JOSEPH HANLON is visiting senior fellow at the Department of International Development of the London School of Economics and visiting senior research fellow at the Open University, Milton Keynes, England. He is a journalist and author or editor of more than a dozen books, looking at how the international context can be changed to give people in the Global South more power over their own development strategies. His most recent books are: Keeping our heads above water: Bangladesh confronts climate change (with Manoj Roy and David Hulme, 2017), Galinhas e cerveja: uma receita para o crescimento (Chickens and beer: A recipe for agricultural growth in Mozambique with Teresa Smart, 2014), and Zimbabwe Takes Back its Land (with Teresa Smart, 2013). He has been writing about Mozambique for nearly 40 years and is editor of the Mozambique Political Process Bulletin. He was policy officer for the Jubilee 2000 campaign to cancel the unpayable debt of poor countries.

JOSEPH HANLON is visiting senior fellow at the Department of International Development of the London School of Economics and visiting senior research fellow at the Open University, Milton Keynes, England. He is a journalist and author or editor of more than a dozen books, looking at how the international context can be changed to give people in the Global South more power over their own development strategies. He has been writing about Mozambique for nearly 40 years.

That strategy calls for expanding cash payments to most older people and small children. Under plans sent to Parliament, cash transfers to the elderly and disabled would rise next year by 84% in Meticais terms and 131% in dollar terms – a rise from 0.21% to 0.32% of GNP.

“Mozambique has a nationally-developed system, which is different from many other countries where social protection is donor-driven,” the representative of an important donor told me as I researched this blog. But there is an intensifying three-way battle between:

  • The government, backed by UN agencies, notably Unicef and the ILO (International Labour Organization), who want a universal benefit for nearly all children and elderly, administered through the government.
  • Bilateral donors, who tend to back the government strategy and a universal benefit, but oppose government administration. Because of the freeze on aid to government caused by the $2 billion secret debt scandal, most donors want alternative parallel non-government administration structures.
  • The World Bank, which opposes universal benefits and wants narrowly-targeted benefits based on means tests, administered by the private sector.

The main component of Mozambique’s current cash transfer programme is the PSSB (Programa Subsidio Social Basico, Basic Social Subsidy Progamme) aimed at elderly and disabled people with income of less than two-thirds of the poverty line. This is a family grant, and ranges from MT 310 ($5) per month for individuals to MT 620 ($10) per month to elderly people with four dependents, a small amount, but the median rural cash income is only MT 285 ($4.60) per family per month.

The plan and budget for 2018, submitted to parliament last month, allows for an increase to PSSB beneficiaries and in the amount of money paid to each will also increase. The cost would rise from MT 1.7 bn ($22.1m) to MT 3.2 bn ($51.6 m).

The National Strategy for Basic Social Security 2016-2024 approved last year by the Council of Ministers is an explicit shift from a targeted, charity focus to a rights-based, universal benefit. The Strategy specifically stresses “respect for the rights and dignity of beneficiaries.” Under the strategy, PSSB recipients would increase to 1.2m in 2024, at a cost of 0.78% of GNP. A new benefit to most children under two years old would go to 1.4m children at a cost of 0.92% of GNP.

Plans for the major expansion led the ministry and agency responsible (Ministerio de Genero, Crianca e Accao Social or Ministry of Gender, Children and Social Action, MGCAS, and Instituteo Nacional de Accao Social or National Social Action Institute, INAS) to move towards better management information and payments systems, and to the outsourcing of payments. It was decided to integrate this into the highly successful national electronic accounting and payments system e-sistafe, which has been developed by the Ministry of Economy and Finance.

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Donor response

In 2016 it was revealed that in 2013/14 state companies had taken $2bn of loans in secret, that the government had lied to the IMF and donors by denying the loans existed, and that much of the money could not be accounted for. The IMF cut off its programme, and in May 2016, most bilateral donors plus the European Union halted all budget support and most aid going through government channels.

Donors stress that want to maintain and increase social protection, but say they cannot give money to MGCAS and INAS, which have historically provided social protection in Mozambique.  In other situations, donors might move to a World Bank managed trust fund. But the donors in Maputo do not support the World Bank line social protection must be targeted, so they have instead become part of the One UN Joint Programme on Social Protection with three UN Agencies (UNICEF, WFP and ILO) and funded by four bilateral donors (UK, Sweden, Netherlands and Ireland). But there is also discussion about routing money through a UN-managed fund.

But some donors have opted to create competing parallel systems – accepting the new strategy as policy but not using government systems for implementation. A first move in this direction was made by UK’s DfID early this year when it issued an invitation to tender for a pilot of the early childhood grant programme and to be run entirely independently of the government.

World Bank

Since 2013, the World Bank has been actively promoting an entirely separate $60m social protection project – a highly-targeted public works programme, the PASP (Progama Accao Social Produtiva, Productive Social Action Programme). The hourly payment is MT 10 ($0.16), less than half the minimum wage. The aim is to target households with unemployed young people using a proxy means test, in what appears to be an attempt to get cash to youth who might riot in the face of austerity.

Public works projects are always difficult to manage, and the World Bank has found this in Mozambique. In a 26 June 2017 evaluation, the World Bank lowered the progress rating from “Moderately Satisfactory” to “Moderately Unsatisfactory”. In four years, only $10m has been spent. And there were no acceptable bidders for an independent payments system for the PASP meant as an alternative to the INAS e-sistafe based system.

The World Bank line to only aim to assist those in extreme poverty, and only on the condition that they work, gains some support from older senior Frelimo leaders, who argue that giving people money makes them lazy. But technicians in MEF, INAS and MGCAS have seen the extensive research evidence contradicting this, and also realise that they do not have the capacity to administer complex selection programmes, and thus they backed the new strategy.

The issue came to head in July when senior MEF officials said they wanted the World Bank project ended, and the money transferred to PSSB. The World Bank refused.

Concluding comments

Unlike many other countries, Mozambique’s social protection system is locally developed and locally owned – and now locally paid for. Its ambitious new strategy would expand this. But Mozambique needs finance from donors and lenders for the implementation. Decisions need to be taken in coming weeks. But donors are divided. Some want to support a genuinely nationally owned and developed social protection system; others will support government policies but do not want government to implement. And the World Bank, backed by the IMF (which the Government needs to unlock other donor assistance) continues to promote a separate, non-inclusive system.

Social protection in Mozambique could be one casualty of the previous Government’s $2bn secret loans.

 

 

 

4 Responses to “How a nation can own its social protection strategy: the Case of Mozambique”

  1. Richard Morgan Reply

    The positions described above in relation to the World Bank in Mozambique do not seem to be consistent with the very strong push for Universal Social Protection that ‘leaves no one behind’, being led by President Jim Kim and DG Guy Ryder of the WB and ILO respectively:

    http://www.worldbank.org/en/news/press-release/2016/09/21/world-bank-ilo-announce-new-push-for-universal-social-protection

    To quote from the above Release from the WB: ‘President Jim Yong Kim said, “Social protection is a means to reduce poverty, achieve greater gender equity, reduce economic inequalities, and to promote good jobs. While many developing countries are already achieving universal schemes designed to ensure that nobody is left behind, only one in five poor people in the lowest-income countries is covered by any form of social protection today. It is profoundly significant that we have come together collectively to help countries close these coverage gaps.”

  2. This is my take to Richard Morgan’s comment. Organizations have DNAs that animate, the living body made of entrenched skills,, professional routines, artifacts, used..in a word, its culture. No leader can change a culture, and people tend to do what they know. There is clearly a disconnect here. Cultures can be powerful forces of change or resistance to change. But organizations evolve and respond to incentives. One way, is for governments to be empowered to deal with those inconsistencies; and set clear frameworks in which advice and support can be provided. Principled advice – aiming at universality, non dis elimination, dignity, etc… – should progressively form the new way of doing business if countries demand and leadership requires. But it will take also building new aptitude’s,and new ways of working.

  3. Thank you Joseph Hanlon for a fascinating account of the competing priorities of different actors in the policy-making process in Mozambique. Let’s hope that government is able to move towards a more comprehensive social security system. We at SASPRI have been working with colleagues in Mozambique to develop a tax-benefit microsimulation model (MOZMOD) which can help shed light on the cost and impact of different policy reforms. The country report is available here: https://www.wider.unu.edu/publication/southmod-country-report-mozambique
    and is part of a UNU-WIDER – University of Essex – SASPRI collaboration called SOUTHMOD https://www.wider.unu.edu/project/southmod-simulating-tax-and-benefit-policies-development
    The first MOZMOD training event for civil servants took place earlier this year in Maputo in
    partnership with the Ministry of Economics and Finance of Mozambique, UNU-WIDER, ILO, University of Essex and SASPRI https://www.wider.unu.edu/event/training-mozmod-%E2%80%93-tax-benefit-microsimulation-model-mozambique
    The model is now being updated to include 2016 and 2017 policies and will be made available via UNU-WIDER for non-commercial use.

  4. Bernd Schubert Reply

    We should appreciate that the INAS managed cash transfer program has for many years reached nearly 500.000 extremely poor families, alas with grants that were always much too small. This has finally been recognized by government, which should also be recognized. In principle social assistance is a government function and should not be implemented by NGOs or other parallel channels. Donor concerns about corruption are a reality and cannot be dismissed. In order to take the need for government ownership and also donor concerns into account, the Zimbabwe Harmonized Social Cash Transfer (HSCT) program could serve as a model. In Zimbabwe donor funds are channelled through an UNICEF managed Child Development Fund, while the program is implemented by the Department of Social Services at national and district level. Joint planning and monitoring using an effective MIS ensures transparency for all stakeholders. Institution building through long term UNICEF financed Technical Assistance was a crucial component for the success of the HSCT program.

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