Lesotho overspends on social protection

 NEO SENOKO

MASERU – While Lesotho has made significant investments in developing social protection programmes over the last two decades, the current programmes are costly.

Social protection spending represents about 6.4 percent of the country’s GDP, thus making Lesotho the highest spender among any African country. This, according to the new social protection assessment report released by the World Bank Group.

The main objective of the report is to take stock of the current performance of Lesotho’s social protection policies, programmes and their appropriateness for the main development challenges facing the country.

The country’s social protection programmes tackle vulnerabilities throughout the life cycle, from children to the elderly. The review found that while several social assistance programmes are effective in reducing poverty, they have low cost-effectiveness and poor targeting with a large share of the support going to the non-poor.

Operational systems used to deliver the programmes remain largely manual and have leakages which impact the efficiency of the programmes.

Simulations show that if programmes such as tertiary bursaries were retained only for poorer students with savings reallocated to a transfer targeted to poorer households, the national poverty rate could be reduced by 3.2 percentage points at the food poverty line.

The report suggests that government reviews the allocation of spending across social protection programmes with the aim of improving value for money while enhancing their benefits for the recipients.

It suggests scaling and re-allocating social protection spending towards poverty-targeted programmes such as the child grant programme whose total cost accounts for only 0.15 percent of GDP.

It also suggests improving social protection systems by shifting payments from cash to digital payments and introducing “Cash Plus” measures to link beneficiaries to productive activities, and link child grants to better investments in human capital.

The government acknowledges and believes the report will help inform the design and implementation of the programmes and policies to ensure efficiency and equitability.

“It will also help us improve the efficiency gains of existing programmes to allow us to fund more programmes such as the disability and infant grant,” Minister of Social Development, ’Matebatso Doti, said.

While several social protection assistance programmes are effective, whether measured by impact or spending effectiveness, the report reveals that spending on social protection is very high and cost-effectiveness varies.

Most overall social protection spending goes to old age pension, school feeding and tertiary bursaries. These programmes, the report states, enjoy strong popular and political support, but have low cost-effectiveness.

“Tertiary bursaries are even regressive in nature. In contrast, the poverty targeted programmes which have higher cost-effectiveness are very small in scale and provide very low benefits.

“This assessment recommends that the government reviews the allocation of spending across the social protection programmes with a view to improving value for money,” the report states.

Social protection programmes and tools can help the poor and most vulnerable mitigate economic and fiscal shocks, but also ensure greater equality of opportunity.

While simulations worldwide show that without these programmes, poverty incidence would be much higher, there is almost always room to improve efficiency and efficacy of social protection programmes, as well as better integrate them with other services.

Increasingly tight fiscal space makes the need to enhance social protection programmes’ efficiency and sustainability ever more urgent.

“It is our hope that this research will enhance policies to ensure that the important investments the government is already making in social protection will help to break the cycle of poverty for the next generation, keep children healthy and in school, and help households transition from social grants for their livelihoods to more sustainable income generating opportunities,” says the World Bank Country Director to Lesotho, Marie Francoise Marie-Nelly, in the report.

 

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