Hagen-Zanker, Jessica and McCord, Anna (2010): Financing Social Protection in the Light of International Spending Targets: A Public Sector Spending Review. Published in:
Download (1796Kb) | Preview
This study explores the ‘affordability’ of development targets in six key sectors (health, education, water and sanitation, agriculture and infrastructure), by means of an empirical study examining sectoral expenditure in five low income case study countries in sub-Saharan Africa (Ethiopia, Kenya, Malawi, Mozambique and Uganda) and comparing them with target levels of expenditure set out in recent international agreements to which sub-Saharan governments are signatories. The study has a particular focus on social protection in response to growing government and donor interest in the affordability of provision in this sector. This approach is taken in order to assess the limitations of the current ‘silo’ approach to sector financing which characterises much of the development financing discourse, and which results in the abstraction of one sector from the broader fiscal whole, to the detriment of overall fiscal coherence and realism. While this study looks at total expenditure per sector, it does not look at efficiency or outcomes of this spending.
The report examines expenditure in 2006/ 2007 in relation to sector-specific international targets, assesses the shortfall, and then explores the fiscal feasibility of financing all six sectoral targets. The paper finds that meeting all the six targets simultaneously would require more than 100% of total government expenditure in four of the five case study countries, and 98% in the fifth, and that to meet these targets while retaining current levels of expenditure in other sectors would imply doubling current levels of government expenditure. Often it is claimed that developing country governments lack the political will to allocate resources to some sectors. However, this study suggests that the inadequacy of public expenditure in key sectors is also informed by the inherent impossibility of simultaneously meeting the range of international commitments to which developing counties are signatories.
Current funding for basic social protection provision is between 0.1% and 0.7% of GDP in the case study countries, compared to target expenditure levels of 4.5% to achieve the goals of the basic social protection component of the AU Social Policy Framework. This study concludes that the social protection sector is in competition with the five other key development sectors and that not all goals can be met from available resources. While there may be potential to increase financing to this sector through the conventional range of instruments (efficiency savings, reallocation, increased borrowing, increased revenue generation, increased ODA or private sector financing) the social protection sector is in effect in competition with each of the other key development sectors in pursuit of any additional resources, and when considered in aggregate as part of the wider fiscal context, it is clear that meeting all targets is not realistic, and consequently that the development vision which underlies them, is challenged, even compromised by the fiscal reality.
Input targets have a role to play in i) motivating greater effort in revenue generation (within the boundaries of sound macroeconomic policy) and ii) encourage governments and donors to prioritise spending by reallocating from low to high-priority sectors within existing budgets. While such targets can serve as useful lobbying mechanisms, spending targets should be taken ‘seriously but not literally’ (Wood, 2004): that is primarily as a guide and motivation for raising and spending public finance. This report does not conclude that such targets should be dropped, but it does caution against the argument that particular sectoral targets are ‘affordable’ in any objective sense.
The report highlights the tension faced by governments between the need for good public financial management on the one hand, and the challenge of meeting international commitments on the other, raising the impossibility of meeting the key development spending targets simultaneously. Given the unavoidable overall financing shortfall, the key question becomes prioritisation of the use of existing resources, the opportunity cost of programming outside these sectors and non priority or ineffective use of resources within the sectors.
|Item Type:||MPRA Paper|
|Original Title:||Financing Social Protection in the Light of International Spending Targets: A Public Sector Spending Review|
|Keywords:||social protection; affordability; development targets; government budgets; Sub-Saharan Africa|
|Subjects:||H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures; Other Public Investment and Capital Stock
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy
H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
H - Public Economics > H5 - National Government Expenditures and Related Policies > H53 - Government Expenditures and Welfare Programs
P - Economic Systems > P4 - Other Economic Systems > P41 - Planning, Coordination, and Reform
F - International Economics > F3 - International Finance > F35 - Foreign Aid
H - Public Economics > H5 - National Government Expenditures and Related Policies > H51 - Government Expenditures and Health
O - Economic Development, Technological Change, and Growth > O2 - Development Planning and Policy > O20 - General
F - International Economics > F5 - International Relations and International Political Economy > F53 - International Agreements and Observance; International Organizations
H - Public Economics > H5 - National Government Expenditures and Related Policies > H52 - Government Expenditures and Education
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
H - Public Economics > H6 - National Budget, Deficit, and Debt > H61 - Budget; Budget Systems
|Depositing User:||Jessica Hagen-Zanker|
|Date Deposited:||26. Jan 2011 20:46|
|Last Modified:||12. Feb 2013 09:35|
AfricaSan (2008). The eThekwini Declaration and AfricaSan Action Plan. Downloaded from http://www.wsp.org/UserFiles/file/eThekwiniAfricaSan.pdf
African Union (2001) Abuja Declaration on HIV/ Aids, Tuberculosis and Other Infectious Diseases. Downloaded from http://www.un.org/ga/aids/pdf/abuja_declaration.pdf
African Union (2003) Conference of Ministers of Agriculture of the African Union Report of the Ministers of Agriculture. Downloaded from http://www.africa-union.org/News_Events/Calendar_of_%20Events/AGRICULTURE/Report-MinistersofAgri%20july%201-2%20%202003.pdf
African Union (2008) Sharm El-Sheikh Commitments for Accelerating the Achievement of Water and Sanitation Goals in Africa. Downloaded from http://www.unsgab.org/news/docs/080701_AUDeclarationSeS.pdf
African Union (2008) Social Policy Framework for Africa. Downloaded from http://www.un.org/esa/socdev/egms/docs/2009/Ghana/au2.pdf
African Union (2009) Assembly of the African Union 12th Ordinary Session Decisions, Declarations, Message of Congratulations and Motion. Downloaded from http://www.africa-union.org/root/UA/Conferences/2009/Jan/Summit_Jan_2009/doc/CONFERENCE/ASSEMBAS%20AU%20DEC%20%20208-240%20%28XII%29.pdf
Bruns, B., Mingat, A. and Rakotomalala, R. (2003) Achieving universal primary education by 2015: a chance for every child. World Bank, Washington DC, USA
Christiansen, K. et al. (2007) ‘Interim Report of the Uganda Donor Division of Labour Exercise’ London: ODI
Commission on Macroeconomics and Health (2001) Macroeconomics and health: Investing in health for economic development. World Health Organization, Geneva, Switzerland.
Devarajan, S., Miller, M. and Swanson, E. (2002) Goals for Development History, Prospects, and Costs. Policy Research Working Paper 2819, World Bank, Washington DC, USA. Downloaded from http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2002/04/26/000094946_02041804272578/Rendered/PDF/multi0page.pdf
Education For All Fast Track Initiative (2009) Financing and FTI Trust Funds. Downloaded from http://www.educationfasttrack.org/faqs/#faqSix
EURODAD (2008) Old Habits Die Hard: Aid and Accountability in Sierra Leone Brussels: EURODAD
Fukuda-Parr, S. (2010) Accelerating progress or achieving the targets: a human rights approach to using MDGs. Presentation at CPRC International Conference 2010, Ten Years of War Against Poverty. 8-10 September, 2010, University of Manchester.
Foster, V. and Briceño-Garmendia, C. (2010). Africa’s Infrastructure: A Time for Transformation. World Bank, Washington DC, USA
Infrastructure Consortium for Africa (2010) Challenge Why More and Better Infrastructure. Downloaded from: http://www.icafrica.org/en/infrastructure-issues/aims1/
International Budget Partnership (2008) Open Budget Index 2008, Washington DC: IBP
International Labour Organization (2008) Can low-income countries afford basic social security? Social security policy briefings Paper 3, Social Security Department, International Labour Office, Geneva, Switzerland.
International Labour Organization (2010) Extending social security to all A guide through challenges and options, Social Security Department, International Labour Office, Geneva, Switzerland.
Kisero, J. (2008) Aid Cut By Donors Likely To Result In Budget Shortfall, Financial Instability By The East African Page: 2 on Tue 22nd January 2008 http://www.marsgroupkenya.org/multimedia/?StoryID=208415&p=Ministry+of+Lands+and+Settlement&page=2
Miller, M. (2010) Private correspondence on Malawi budget
Mokoro Ltd (2008) Bringing Aid on Budget Synthesis Report, Pretoria: CABRI
Moon, S. (2010) Practical Approaches to the Aid Effectiveness Agenda: Evidence in Aligning Aid Information with Recipient Country Budgets, London: ODI.
Moon, S. and Williamson, T. (2009) Greater Aid Transparency: Crucial for Aid Effectiveness, London: Overseas Development Institute
Okudi, R. (2010) private correspondence on Uganda budget
Republic of Kenya (2010c) Medium Term Expenditure Framework 2010/11 – 2012/13 Report for the Agriculture and Rural Development Sector, January 2010.
Rosegrant, M., Ringler, C., Benson, T., Diao, X., Resnick, D. Thurlow, J. Torero, M., Orden, D. (2006) Agriculture and achieving the Millennium Development Goals. International Food Policy Research Institute (IFPRI)
Sachs, J., McArthur, J., Schmidt-Traub, G., Kruk, M., Bahadur, C., Faye, M. and McCord, C. (2004a) Ending Africa’s Poverty Trap. Brookings Papers on Economic Activity 1:2004. Downloaded from: http://muse.jhu.edu/journals/brookings_papers_on_economic_activity/v2004/2004.1kremer.pdf
Sachs, J., McArthur, J., Schmidt-Traub, G., Kruk, M., Bahadur, C., Faye, M. and M. Kruk, (2004b) Millennium Development Goals Needs Assessments Millennium Project Working Paper, downloaded from http://www.unmillenniumproject.org/documents/mp_ccspaper_jan1704.pdf#
Schiavo-Campo, S. and Tommasi, D. (1999) Managing Government Expenditure, Asian Development Bank.
Singh, R. Ellis, K, Highton, N, Toranzo, G and Wathne, C. (2008) Public Expenditure Composition & Flexibility: Phase II, Overseas Development Institute, London (unpublished).
Tavakoli, H. and Hedger, E. (mimeo) ‘Public Expenditure Analysis in Malawi: Trends Performance’ London: ODI
Uganda Ministry of Finance Planning and Economic Development (2008) Background to the Budget 2008/9, Kampala: MoFPED
United Nations (2005) Millennium Development Goals Indicators. Downloaded from http://unstats.un.org/unsd/mdg/SeriesDetail.aspx?srid=580
United Nations Development Programme (2006) Human Development Report Beyond scarcity: Power, poverty and the global water crisis. United Nations Development Programme, New York, USA.
Waldman, M. (2008) Falling Short: Aid Effectiveness in Afghanistan, Kabul: Agency Coordinating Body for Aid Relief.
Warren-Rodriguez, A (2007) Putting Aid on Budget: A Case study of Mozambique, Mokoro Ltd, London, UK.
Weigand, C. and Grosh, M. (2008) Levels and Patterns of Safety Net Spending in Developing and Transition countries, SP Discussion Paper No 0817, World Bank, Washington DC, USA.
Wiseman, W. (2010) Private Correspondence on PSNP
Wood, A. (2004) Presentation in UKDFID. Unpublished.
World Bank (2003) The Contribution of Social Protection to the Millennium Development Goals World Bank, Washington DC, USA.
World Bank (2006) World Development Report 2006: Equity and Development, World Bank, Washington DC, USA
World Bank (2007) Implementation and results report June 26 2007 (Report No: ICR000008), World Bank, Washington DC, USA.
World Bank (2008) World Development Report 2008: Agriculture for Development, World Bank, Washington DC, USA
World Health Organisation (2007) Maternal Mortality in 2005, World Health Organization, Geneva, Switzerland.
Zerfu, D. (2010) Private Correspondence on Ethiopian Budget