15 December 2014 Michael Samson Economic Policy Research Institute SESSION 1: Developing a social protection agenda for equitable growth in Tanzania THE UNITED REPUBLIC OF TANZANIA - MINISTRY OF FINANCE I INTERNATIONAL CONFERENCE Social Protection: Building Effective and Sustainable Systems for Equitable Growth Perspectives, Policies and Best Practices December 15-17, 2014 International Conference Centre – Simba Hall, Arusha, Tanzania

SOURCE: Garcia and Moore (2012) Social protection has grown rapidly in Africa

Social protection reduces poverty in high-income countries SOURCE: OECD AND ILO

Social protection reduces poverty in high-income countries

SOURCE: OECD AND ILO Social protection reduces poverty in high-income countries

Inequality is increasing in Tanzania (as it is in most countries of the world) poorestrichestmiddle

Multi-dimensional impacts of SP Poverty reduction Main aim of social protection Protects people from shocks and directly supports well-being Scaling up the PSSN in Tanzania is estimated to reduce extreme poverty by 52%

Multi-dimensional impacts of SP Human capital Most documented secondary aim Improves nutrition, education, and health outcomes For both conditional and unconditional programmes A major priority in countries like Tanzania and Uganda

Biological transmission mechanisms of social protection

Social protection represents an investment in human capital achieving the highest returns of any public investment Heckman & Carneiro (2003) and Handa (2007)

Evidence from child benefit programs around the world document reductions in stunting

Likewise, evidence from these programs around the world demonstrate increases in secondary school attendance

Multi-dimensional impacts of social protection Livelihoods A surprising impact People use social protection benefits to support enterprises and labour market participation Small but significant improvements in many countries

Human capital development promotes pro-poor growth South Africa Increase wages % more than the cost of transfers

Multi-dimensional impacts of social protection Risk management A subtle but powerful impact Protects people from shocks and directly supports well-being Prevents further decline into poverty Protects assets Promotes productive risk-taking

Social Protection promotes better risk management and encourages investment

Social protection enables households to achieve more sustaining livelihoods “If I didn’t get that 25,000 [Uganda schillings, about US$9/month], I would never have dreamt of owning these livestock. I would never have joined these groups. How would that have happened?” Joyce Mary Adeke, a71 year old widow living in Moru village in Uganda’s Katakwi district SOURCE: Government of Uganda,

Social protection improves labour market participation and employment n=3462 n=1795

Multi-dimensional impacts of social protection Economic resilience Enables the economy to better withstand external shocks Provides an automatic stabiliser for the economy Social protection provides efficient economic stimulus

Multi-dimensional impacts of social protection Social cohesion Social protection represents one of the most concrete and valued forms of government delivery Strengthens the bond between State and people Resulting social cohesion promotes private investment

Multi-dimensional impacts of social protection Economic reform S ocial protection shares the benefits of economic growth Makes any economic reform programme more pro-poor Increases the likelihood of success of the reforms

Social protection reinforces social cohesion, facilitating economic reforms that promote pro-poor growth Mauritius  A half-century ago had a poverty profile similar to any African country  Today, the lowest poverty rates on the Continent, and some of the highest growth rates over the past several decades  Social protection enabled a restructuring of the economy onto an export- led high growth path

Social protection invests in the economic sector most disadvantaged by a resource boom and helps to immunise against “Dutch disease” Natural resources: boom or curse?  Mineral and energy wealth has its advantages…  But can intensify macroeconomic instability and open a country to global shocks  It can intensify inequality  It can undermine competitiveness  Social protection can help counter all these adverse effects—by improving pro-poor policy, enabling households to deal with shocks, and investing in the sector whose competitiveness is most negatively affected

Multi-dimensional impacts of social protection The case for social protection involves a wide-ranging spectrum of social and economic impacts.

Uganda’s development planning framework can maximize economic growth impacts

Multi-dimensional impacts of social protection Impacts reinforce each other Poverty reduction further develops human capital … further improving livelihoods … bolstering risk management … reinforcing resilience …