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.
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.
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.
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.
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.