Helping households cope with covariate shocks is one of the primary objectives of social protection policy. In contrast with idiosyncratic shocks that affect individuals over the course of their lifetime, such as loss of employment and ill-health, covariate shocks commonly affect entire communities or large parts of a country’s population at the same time. Examples include economic crises, disasters associated with extreme weather, climate or geological events and conflict-related shocks. Such shocks can have devastating economic and social impacts and contribute significantly to scaling back progress made in poverty reduction.
This paper draws on the experience of four countries that are highly vulnerable to covariate shocks and that have implemented a host of social protection policy adjustments and reforms in the aftermath of shocks – Bangladesh, Kenya, Pakistan and Viet Nam. For the four case study countries, the paper identifies the central challenges encountered to timely and adequate social protection shock response and the policy adjustments and measures that have been undertaken to address them. The study is primarily a desk-based literature review of published and unpublished documents on the four countries.
Social protection instruments: design reforms and adjustments
While the expansion of existing and well-established programmes typically facilitates rapid and effective response – and underscores the importance of having such programmes in place in advance of a shock – new programmes set up in response to shocks have also in some cases developed into longer-term, institutionalised programmes, indicating that shocks may act as important triggers for social protection development. The ability to scale-up existing social assistance programmes in an adequate time frame critically depends on the targeting and delivery mechanisms adopted.
Social protection targeting and delivery
Administrative registries and other data sources with broad coverage, which provide information on vulnerable groups beyond narrow poverty lists and existing social protection beneficiaries, are a powerful tool in facilitating policy scale-up. The timely delivery of social protection in the aftermath of a shock requires strong coordination of the actors involved. The modality of delivery also matters and recent developments in the use of new information technology have helped overcome some of the challenges associated with timely delivery. The reliance on a combination of delivery mechanisms and on new information technologies has also proved promising. In the area of benefit payments for instance, the reliance on smart cards, electronic and mobile phone payment systems has proved effective in delivering programmes in the aftermath of a shock across the countries examined in this paper. Critical elements that ensured the successful implementation of these instruments include strong partnerships with implementing agencies, and the establishment of the relevant infrastructure in advance of the shock.
Social protection financing
The timely disbursement of resources for social protection is increasingly being secured through the establishment of contingency funds. While donor funding can provide precious resources in challenging times, donor dependence can also lead to uncertainty and weak continuity, as the case of Kenya illustrates.
Social protection planning and shock preparedness
Having social protection systems in place that can be adapted and expanded to accommodate greater needs and larger numbers of people in need is critical to effective shock response. Setting up new programmes and adopting new technologies for implementation after the onset of a shock can be difficult and limit a policy’s effectiveness. Efforts to introduce and expand social protection where it has been largely absent or limited is a critical element to securing adequate shock response.
Policy implications
- Countries with formal social protection schemes are better equipped to respond to shocks than countries without them.
- The three main challenges to shock-responsive social protection are: lack of policy flexibility and adaptive capacity, inadequate financing for rapid scale-up and weak preparedness.
- Having a system in place that can be expanded and adapted to accommodate increased need is critical to effective social protection provision in the event of a shock.
- Looking ahead, shock preparedness has much to gain from strengthened integration of social protection, humanitarian response and disaster risk reduction interventions.
