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The global economic crisis, public budgets and childsensitive social protection in Sub-Saharan Africa Andy Sumner [email protected] Contents 1. The crisis so far 2. The crisis in SSA so far and public budgets 3. Policy responses, social protection, and policy narratives looking ahead 4. Conclusions 1. The crisis so far • What’s different? Crisis origins in the industrialized countries; speed of global transmission; the size of the shock; compound nature (following fuel and food shocks) and long run impacts for children. • What happened and what didn’t? Growth slowdown but few outright recessions; falls in exports; FDI; remittances but very variable; aid budgets under pressure but no large fall (yet?) • A new opportunity to promote social protection (SP)? SP in East Asia a result of last crisis; strong evidence that SP is a cost-effective use of public budgets; many pilots in SSA and new resources - VFF, RSRP but will future fiscal concerns squeeze SP? • What does this all mean for child poverty? Child poverty estimates of the current crisis Countries, people, US$ or child mortality: – 43 or 33 countries; – 46, 53, 90, 108 million new poor; – US$46 per poor African; – 200-400,000 more infant deaths. • Depends on growth/poverty assumptions (remember debates on poverty elasticities?) and whose growth estimates (IMF; World Bank; UN-DESA and revisions); How does a crisis transmit to child poverty? Global macro-shocks and responses Trade Capital National economy impacts and responses Growth Jobs Budgets Asset values Prices Household impacts and responses Income falls Dietary changes School dropouts Health impacts Asset sales Consumption poverty - MDG 1 - National poverty headcount (% of popn) before/after selected economic crises 60 50 40 30 20 10 0 Malaysia (Sept. 1997) South Korea (Oct. 1997) Indonesia (July 1997) Russia (August 1998) Mexico (Dec. 1994) Argentina (Dec. 2001) Child nutrition - MDG 1 - Low birth weight (as % of all births) before/after selected economic crises 16 14 12 10 8 6 4 2 0 Mexico (Dec. 1994) Thailand (July 1997) Brazil (January 1999) Argentina (Dec. 2001) Indonesia (July 1997) Malaysia (Sept. 1997) Source: World Development Indicators (Dec. 2008). 100 Child education - MDG 2 - Primary school completion rates (% of cohort) before/after selected economic crises 98 96 94 92 90 88 Mexico (Dec. 1994) Indonesia (July 1997) Malaysia (Sept. 1997) South Korea (Oct. 1997) Russia (August 1998) Child poverty impacts of previous crisis • MDG 1a Consumption poverty – unambiguous increases • MDG 1b and 2 Child nutrition/health/schooling – Generally worsen but not always – policy can prevent this. • Impacts and equity – Unequal impacts for children and by gender (HH coping mechanisms); • Other… – Strong evidence of psychological distress and mental health problems (Das, 2008); elevated levels of community and intra-household conflict during and post-crisis (Friedman and Thomas, 2007; World Bank, 2008a); • But…. – Evidence is generally from middle income Asia and Latin America; current crisis is different – compound nature after food/fuel shocks; More thinking on long-run capabilities and inter-generational aspects? Evidence on child poverty impacts of the current crisis • Hossain et al., (2009) study in 5 countries: Food: higher proportion of income; less diverse/lower nutritional value, less, women eating least/last; Range of health impacts reported; School absenteeism and dropout, child labour; Intrahousehold tensions, abandonment of children and elderly and signs of rising social tension; Criminalisation of youth and rising crime. • People’s own crisis indicators? How about children’s? Changes in prices, reduction in the amount of paid workers; number of vacant dormitories rented for export workers, reduced working hours, termination/broken contracts, lay-offs, returning migration. 2. The crisis in SSA and public budgets Surely low income, subsistence and/or agricultural economies aren’t linked to complex global financial markets? % banking sector assets held by foreign banks: > 50% = e.g. Mozambique (100%), Uganda (80%), Zambia (77%), Tanzania (66%) Ghana (65%). Remittances as % GDP: > 2% = e.g. Sierra Leone (9%), Kenya (7%), Nigeria (6%), Uganda (4%); Ethiopia (2%). Primary commodities as % exports: >80% = e.g. Ethiopia, Ghana, Kenya, Malawi Mozambique, Nigeria, Rwanda, Sierra Leone, Sudan,Tanzania, Uganda, Zambia. Many countries have multiple economic vulnerabilities Data so far on SSA and outlook • Export earnings have not fallen radically but haven’t grown at pre-crisis rates (exception is oil exporters have big falls) • Large falls in FDI and remittances in many countries but not all; • Significant deceleration in GDP per capita growth rates; • Pressure on public expenditure in some countries immediately, and most in next 2 years. Most striking trend is debt servicing upward trend - large annual increases in debt servicing; 14 Real GDP per capita growth (%) 12 10 8 2008 2009 6 2010 4 2 0 Ethiopia -2 Kenya Malawi Nigeria Sudan Ghana Mozambique Uganda Tanzania Zambia 60 Public spending as a % of GDP 50 40 2007 2008 30 2009 2010 20 10 0 Ethiopia Kenya Malawi Nigeria Sudan Ghana Mozambique Uganda Tanzania Zambia 500 Debt service in US$m 450 400 350 2007 300 2008 250 2009 200 2010 150 100 50 0 Ethiopia Kenya Malawi Sudan Ghana Mozambique Uganda Tanzania Zambia 3. Policy responses, social protection, and policy narratives looking ahead • Context Some expansionary fiscal policy e.g. Zambia; Tanzania; Mozambique; but exception – generally fiscal tightening and likely to continue; (aid under pressure too). • Policy narratives Shifting ‘conventional wisdom’ on public expenditure towards social protection and ‘graduation’; plenty of evidence that SP reduces child poverty; more pilots emerging in SSA; more resources, more donor support, more domestic support? • Looking ahead Taking human development to the next dimension(s) - what might ‘human wellbeing’ offer SP? From human development to ‘human wellbeing’? What a child has; What a child can do with what they have; How a child thinks about what they have and can do. Material wellbeing i.e. MDGs and UNCRC child survival; child development Relational wellbeing i.e. UNCRC - child protection; participation and Innocenti Scorecard peer/family relationships, behaviours/risks Subjective wellbeing i.e. UNICEF Innocenti score card – SWB of health, personal and schooling ‘Human wellbeing’ and the causes of child poverty The case of the IGT of child malnutrition Material Dimensions of Relational Dimensions Subjective Dimensions Wellbeing – standard of Wellbeing – personal of Wellbeing – values, of living and social relations perceptions, experiences What is transmitted? Under-nutrition as measured by agespecific height and weight Physiological mechanisms, via growth in the womb; Lack of information on what a healthy baby looks like How is it transmitted? What determines transmission? Rules about who deserves the most and best food in the household Differential wages for males and females, dowry and property IGT Lack of agency of women to negotiate child care. Eating down in pregnancy (avoiding too much weight gain) Lack of external norms about healthy child size Inability or unwillingness to interact with more diverse group of people, ideas; ‘Human wellbeing’ and policy responses Types of policy responses Material Dimensions of Relational Dimensions Subjective Dimensions Wellbeing – standard of of Wellbeing – personal of Wellbeing – values, living and social relations perceptions, experiences Capabilities Interventions Asset transfer schemes; credit and savings schemes (e.g. MDG 1) Human and skills development schemes; Empowerment programmes (e.g. MDG 2). The social and cultural dimensions of education programmes (e.g. MDGs 2, 3, 5, 6). Conditions Interventions Land reform; The regulation of markets (e.g. monopoly regulation) Legal Reform; Rights-based approaches; Governance Reforms. Societal campaigns for social and cultural reform (e.g. dowry campaign) How might ‘human wellbeing’ help with SP? Type of SP Instruments (Davies and McGregor, 2009). Protective (social assistance) Social transfers; disability benefit; pension schemes; social services Preventive (Insurance and diversification) Social transfers; funeral societies; livelihoods diversification; social insurance; savings clubs; Promotive (economic opportunities) Social transfers; school feeding; starter packs; public works programmes; access to credit; asset transfers; access to common property resources Transformative (addressing underlying social vulnerabilities) Land reform; the regulation of markets (e.g. monopoly regulation); legal Reform; Rights-based approaches; governance Reforms; societal campaigns for social/cultural reform (e.g. dowries); promotion of minority rights How might ‘human wellbeing’ help with SP? Type of SP Material Dimensions of Wellbeing – standard of living Relational Dimensions Subjective Dimensions of Wellbeing – personal of Wellbeing – values, and social relations perceptions, experiences Protective (social assistance) Social transfers; disability benefit; pension schemes; social services Preventive (Insurance and diversification) Social transfers; - funeral societies livelihoods diversification; social insurance; savings clubs; Promotive (economic opportunities) Social transfers; school feeding; starter packs; public works programmes Transformative (addressing underlying social vulnerabilities) Land reform; The regulation of markets (e.g. monopoly regulation) access to credit; asset transfers; access to common property resources Legal Reform; Rights-based approaches; Governance Reforms. Societal campaigns for social/cultural reform (e.g. dowries); promotion of minority rights 4. Conclusions • Poverty impacts of previous crises significant for child poverty; Early evidence for current crisis supports this; • SSA connected to crisis but highly nuanced impacts - some countries very badly hit others less so; • Fiscal/aid landscape shifting; thinking about a new policy narrative - from human development to ‘human wellbeing’ implications for child poverty analysis, inter-generational transmission, policy responses and child-sensitive SP?