Poverty dynamics and social protection - what do we need to get to zero poverty?

Shofiqul, from Jessore district, Bangladesh, is now 60 years old. During the 1990s, he cultivated rice, jute, wheat and lentils on his own land, cultivating two seasons of crops each year which he then sold. With the proceeds, he bought more land and a diesel irrigation pump. The pump increased his yields, enabled him to cultivate new varieties and he also hired the machine out to other farmers. By the early 2000s, him and his family were doing very well. Now however, he says that his family has fallen to its lowest level; “in present we only eat rice with salt…in the last few years I have only dreamed about buying an egg. In the last five years, I am unable to give any saree, soap and oil to my wife.”

How did Shofiqul’s family’s situation deteriorate so much? Over the last ten years they have had to lease-out all their land, sell goats and cattle and take multiple loans from both NGOs and moneylenders in order to pay for healthcare, both for himself and for his wife, who still remains unwell. They also had to cover the costs of two marriages for his daughter, with her first husband being abusive. Now they only have one cow and one share-reared cow. He does not see a way to lift himself out of this situation and climb back up to where he was before. Right now it is all about survival in extremely bad conditions - economically, physically, and mentally.

Poverty is dynamic

Poverty is not static and neither is moving out of poverty a one-way street.  As some people escape from poverty, others fall into it while yet others escape from poverty only to returning to living in it again in the future. When it comes to thinking about how to reach Zero Poverty we often think about how to get people out of poverty, but not so much about what is required to prevent them from falling back into it as so many people like Shofiqul do. What needs to be done to ensure people don't fall back? Two recent CPAN policy guides look at how social protection can stop people moving down and also support them in moving up on the poverty ladder.

Figure 1 Descent back into poverty following crop disease

Figure 1 Descent back into poverty following crop disease

Putting a break on falling down the poverty ladder

Social protection covers a range of different programmes, including social assistance and social insurance against a range of risks. Providing a minimum safety net through, for example a regular cash transfer for vulnerable households, which guarantees the most basic needs are met, can prevent people from slipping into poverty by resorting to negative coping strategies, like the sale of productive assets. To do this, social protection needs to provide adequate levels of appropriate support, in a manner which is convenient for people to access and which is reliable and timely.
Different types of social protection are more suitable for different types of shocks or stressors. Clearly the size, duration and speed of onset of the shock are important. Responses to a drought for example might need to be different to those of an earthquake. Social assistance may be more appropriate to help households manage small, frequent events. However, social insurance is likely to be more relevant for larger, low frequency events, such as catastrophic health shocks, where there are limitations to what the support offered by social assistance can stretch to. What form of social protection is most appropriate to reduce impoverishment and what is the interplay between the different types of social protection? It is unlikely that just one tool or approach can prevent impoverishment and there are limitations to what social protection, on its own can achieve. For instance, social protection needs to be combined with interventions which reduce the likelihood of certain events, such as crop loss, occurring e.g. the promotion of drought-resistant varieties of crop in areas prone to low rainfall. So, what we need to think about is the portfolio of social protection programmes and complementary services are needed to prevent impoverishment.

Accelerating movements up

To achieve sustainable poverty reduction, it is critical not only to understand how policies and programmes can prevent impoverishment, but also how they can support sustainable escapes out of poverty. One way is to promote the productive inclusion of the poor, by increasing their capacity to generate income either through wage or self-employment. In the past decade, organisations like BRAC have successfully pioneered models that link the protective element of social protection, such as consumption smoothing through cash or in-kind transfers, with interventions that aim to increase a household’s productivity, such as asset and skills transfers, connections to financial services and income-generating activities. At a wider, more systemic level, countries in Latin America are implementing integrated approaches to the provision of social protection which links social assistance with basic services and employment opportunities. 

The evidence reviewed in a recent CPAN policy guide suggests that the combination of ‘complementary’ interventions can remove constraints to engaging in the economy, and building synergies with public services and the private sector can be critical to promote productive inclusion. Questions still remain about the sustainability of these impacts and whether they work for everyone, as well as how scalable or transferable they are in different contexts. More tailored and specific approaches may be required to reach the poorest and most vulnerable groups who might require social assistance for longer before they can embark into more intensive, short-term livelihood programmes. 

Tensions between what is feasible and what is desirable

So, what we need are policy responses that not only prevent people from falling into poverty or deeper into poverty, but also support them in gradually but sustainably escaping poverty all together. These two objectives cannot necessarily be achieved by the same type of programme. A social assistance programme that guarantees people a minimum standard of living is critical to prevent impoverishment, but is most likely insufficient to make long-lasting livelihood improvements that can lead to sustainable poverty escapes. Promoting livelihoods through social protection requires broader approaches that link consumption support with livelihood training, financial services, markets etc. People who managed to escape poverty might no longer depend on social assistance, but will need to have access to some kind of insurance to protect them from the impoverishing effects of economic, environmental or lifecycle-based shocks. 

All in all, the ideal social protection system would cover all these functions for different groups of vulnerable people. But this is challenge given existing capacity and fiscal constraints, particularly in low income countries. Lessons can be learned from middle income countries like Brazil or Chile, on how integrated approaches to social protection can link recipients with basic services as well as labour market opportunities. But for countries with fairly young social protection programmes a gradual approach to setting up systems has to be considered. It may be advisable to start by focusing on a large-scale, relatively simple flagship social assistance programme as the basis for building capacity and political consensus. This can then be gradually expanded and integrated with other interventions.

The two new CPAN Policy Guides aim to unpack some of these questions:
-    Scott and Diwakar (2016)  highlights the potential trade-offs that policy-makers, programme designers and implementers face in using social protection with the specific objective of preventing impoverishment. 
-    Mariotti et al. (2016)  looks at different social protection programmes in LICs and MICs to distil specific programme features that facilitate the productive inclusion of poor households.  

Regardless of the context, social protection programmes that aim to support sustained escapes from poverty need to be embedded within a coherent national development strategy that aims for pro-poor growth and includes sector policies complementing each other to provide the necessary services for people to escape poverty and remain out of it over time.

This blog was written by Martina Ulrichs and Lucy Scott


Photo credit: An older man in rural Bangladesh by Scott Wallace / World Bank