By Olivier De Schutter, United Nations Special Rapporteur on extreme poverty and human rights
Progress on poverty eradication is fading fast. We’re halfway to 2030, the deadline for achieving the Sustainable Development Goals, and the number of people living in extreme poverty is higher than it was four years ago.
This reversal in progress can be attributed to multiple crises over recent years – from COVID-19 to the spike in global inflation caused by Russia’s invasion of Ukraine – that the world simply wasn’t prepared for. Too little had been invested in the social protection systems that would have prevented millions from falling into poverty.
Despite being one of the most effective anti-poverty programmes we have at our disposal – as well as a universal human right – social protection coverage remains shockingly low. Over four billion people globally receive no benefits at all, with the situation particularly acute in Africa where over 80% of the population have no access to any form of social protection. Estimates show that an additional 165 million people fell into poverty between 2020 to 2023 as debt servicing was prioritised over spending on social protection, health and education.
Future crises – economic, climatic, sanitary – will continue to hit, and billions of people are still unprotected, mainly in low-income countries. Time then, to question why social protection accounted for just US $2.4 billion, or 1.2% of total Official Development Assistance (ODA) in 2019.
A drop in the ocean
ODA’s contribution to social protection is a drop in the ocean when compared to the financing gap: estimated by the International Labour Organisation (ILO) at US $77.9 billion per year (including US $41.8 billion for healthcare) to meet the needs of the 32 poorest countries in the world.
Given the immense benefits of investing in social protection, this makes little sense. Social protection has proven not to be a cost, but an investment, with high returns that benefit society and the economy.
Social protection plays a stabilising role in times of economic downturn because it raises the consumption levels of low-income households. It strengthens the resilience of households, whose savings may protect them from having to sell productive assets in times of crisis, or from being driven into destitution because of catastrophic health payments. And it has significant multiplier effects: leading to improved health outcomes and higher labour market participation rates, both of which benefit the wider economy.
Crucially, it allows families to invest more in the education of their children, breaking the vicious cycles of poverty. As I set out with colleagues in a forthcoming book The Escape from Poverty, children who grow up in poverty not only have limited opportunities to reach their full potential; they also have a much higher risk of raising their own children in poverty. Cash transfers have been proven to reduce child labour and increase school enrolment rates – the most effective way for children to break free from poverty. Even old-age pension schemes have similar impacts, since the increased disposable income of households is often invested in education.
Yet low-income countries often do not have enough fiscal space to establish these social protection floors, since social needs are typically high and public revenues relatively low. This is why it is imperative that ODA steps in and steps up.
Fund the gap
Financing the social protection gap is ambitious, but the rewards are immense: scaling up international development co-operation in this area could guarantee income and health security to 711 million people in the 32 low-income countries.
And it is affordable. Had traditional donors collectively met their commitment to allocate 0.7% of their Gross National Income to ODA in 2022, ODA would have reached US $397 billion – an additional US $190 billion that could have been invested in social protection without going beyond existing commitments.
The report I presented in 2021 to the United Nations Human Rights Council makes the case for significantly increasing the proportion of bilateral ODA going to social protection. It also calls for a new multilateral financing mechanism – a Global Fund for Social Protection – which would ensure support was directed towards the countries and initiatives that presented the most convincing multi-year plans to strengthen domestic social protection systems. The Fund would also allow donors to pool their resources, creating greater predictability for beneficiaries than project-based bilateral forms of support: while schools and hospitals can be built in a few months, social protection floors may need years to be put in place.
As we approach the next Development Assistance Committee High Level Meeting in November, donors should ask themselves why social protection has been so neglected in ODA? A broad alliance involving governments, UN agencies and NGOs, already exists under the USP 2030 (Universal Social Protection) partnership, to promote the establishment of social protection floors. This alliance now needs a strong signal from donors that ODA will support their efforts.