Nepal Social Protection Index – Going Forward

1. NepalSocial Protection Index –Going Forward Suman K. Sharma, Ph.D. Meeting of Social Policy Indicators’ Experts in Asia ADB/ILO/OECD/Korea Policy Centre 19 – 20 November 2008 Seoul, South Korea

2. Presentation Outline • Nepal: Basic Statistics • Indicators of Social Protection Index (SPI): Features • Distribution of SP Expenditure • SP Coverage Indicators - Largest SP programs • Updated SPI : Key aspects • Recent Initiatives • Going Forward: Future SPI Suman

3. Nepal : Basic Statistics Total Population27.6 m (2006)GDP Growth Rate (%)2.5 (2007)Real inflation (%)6.4 (2007)GDP per capita (US $)320 (WDI)GDP per capita (2000 PPP $)1379Population below poverty line 31 (2004)Population below $1 a day poverty line 24.1Female Life Expectancy61.6 (2000-05)Children in total population (%)38.5 (2006)Elderly in total population (%)3.7 (2006)Average annual population growth (%)2.0Sources: Economic Survey, Ministry of Finance, GON 2008;Economic & Social Survey of Asia & Pacific 2008, UNESCAP 08 Suman

4. NEPAL: Distribution of SP Expenditure by SP Category (2004/05) Variable 2004/05 Social Insurance 45% Area/Micro-based 21% Labor Market Programs 21% Social Assistance 8% Child Protection 5% Total SP Expenditure (NRs. in billions) 11.74 Share of tot SP exp in GDP (actual) 2.3% Suman

5. NEPAL: Distribution of SP Expenditure by SP Category (2002/03 and 2004/05) Suman

6. NEPAL SPI: Summary of Results (2002/03 and 2004/05) Suman

7. Updated SPI in 2004/05: Key Aspects - Expenditure (1) • Total SP expenditure = NRs. 11.7 b slightly above 2% of GDP • Almost 50% of the total SP expenditure was on Social Insurance • Micro/area based programs was the next most important SP expenditure component (accounting for slightly more than 20% of total SP expenditure) • Active Labour Market programs increased share to 16.4%. • Child protection accounted for a little more than 5% • Health financing increased to 4.8% - Greater community involvement Suman

8. Updated SPI in 2004/05: Key Aspects - Coverage (2) • Microcredit program tops the list- total beneficiaries 1.5 m • Next largest: Food for Work prgm –est beneficiry = 800,000 • Educational assistance (est beneficiaries = 700,000), social assistance (550,000) and loans for job creation programs • SP programs in terms of poor beneficiaries: • Microcredit the highest followed by food-for-work program. • Out of the five, remaining three largest programs are: • Educational assistance, Social assistance and Loans for job creation. • Except for relatively higher ranking of Food-for-work program in 04/05, no significant difference in relative ranking of other programs Suman

9. Recent Initiatives (1) • Interim Plan (2007/10): re-emphasizes on Social Inclusion • Latest Budget Speech (2008/09) rearticulates inclusion: Policy Priority: Completion of Peace process and immediate relief; Accelerated economic growth; Social security & inclusion Immediate relief & rural construction: (a) Relief & compensation for conflict affected people – relief to families of martrys/disappeared – subsistence/allowances (b) Development of cooperative public dist system – guarantee supplies of goods at concessional rate for poor – Annual Rs. 100,000 to 4000 consumer cooperatives – coop shops will sell essential consumer goods to all poor (ID card) Suman

10. Recent Initiatives (2) (c) Social Assistance Programs: modified effective Sept 08 -senior citizen allowance: age bar relaxed in some cases – monthly Rs 500 for all age groups of endangered ethnicities & people from remote areas - monthly Rs 500 for Dalits, single women, people of 60+ years from Karnali Zone -monthly Rs 500 for all other citizens above 70 years of age - Disability allowances increased to monthly Rs 1000 for fully handicappend & disabled and Rs 300 for partically handicapped and disabled (d) Debt relief to small farmers / HH entrepreneurs – debt waived for those affected by natural disasters & conflict; small farmers below poverty line and HH entrepreneurs Suman

11. Recent Initiatives (3) • Other SP Programs -Disabled Student Support Program: scholarship to disabled student - Food for Education Program: nutrition/health program, day-time tiffin; female school motivation - Health: Women volunteer program; Free and Community Health Insurance Program - Senior citizens: Senior Citizen Act; SC Healthcare program; Care Centres for SC; SC Treatment Program extended to 75 districts - Programs for Disabled: ID cards distributed to all disabled in 75 districts; Vocational trainings; Community based reform program (25 dist); Nepal signed Protocal of Disabled Rights Suman

12. Recent Initiatives (4) • Programs for Child Rights -Rehabilitation programs for children of prisoners - Instant support for conflict-hit children (health, schooling) - Legal aspect: Courts for children established - Children Tracing Coordination Centres formed (free telephones) - 1098 Child helplines in operation - Separate legal provision regarding adoption of children - Child labor alleviation program Suman

13. Going Forward: future SPI (1) • Data Collection Process: institutionalize in real sense: coordinating body -facilitate future exercise • Future SPI: Expand Coverage: Some aspects can be crucial : at least should provide an estimate of respective share(s) in SP components - Informal Support system: exist in rural areas/certain communities: Trust fund set up in advance; cooperation in kind; funeral expenses - Social capital: measuring networks and social values i) Levels of trust, (ii) Membership; (iii) Networks What have they done about it? Contracts/Social Bonds? - How about Remittances? Even official estimates are overwhelming – obvious implication on all 3 SP components; However, detailed micro level info tricky – need greater mobilization of local manpower Suman

14. Going Forward: future SPI (2): Demand Side of Equation • Don’t forget: Demand side of equation! – What kinds of risks and shocks they’re more afraid of and need protection from? -Most common risks: health/life ;these shocks are predictable largely but some shocks can be unpredictable - Disasters (natural and man-made): recent evidences show much more threatening Risks are covariant in nature Traditional SP system breaks down Any protection from such risks? Expenditure (Govt + others)? Preparedness measures? What can be done? At a policy level, increasing need for better integration of poverty reduction and SP prgms w/ other sectoral issues Future SPI need to take account of these aspects Suman

15. Going Forward: future SPI (3) • Visualize Future Needs Apart from national level SPI, need disaggregated SPI? - rural/urban divide given the dominance of rural poverty ecological zones – Mountains, Hills and Terai? - SPI for South may be different from that for North ? • Let’s look into Definition of SP itself - Need to broaden the areas than those covered by traditional SP definitions? How about looking into SP for chronically poor as well apart from the transient poor? - Do we need differential treatment for each group of poor? Nepal’s chronic poverty research shows not all poverty determinants overlap e.g., Lack of Human capital more closely associated with chronically poor than transient poor Suman

16. Going Forward: future SPI (4) • Future SP Adventure: A Joint Platform? -An apex body to ensure national level coordination • A joint platform encompassing all stakeholders – HHs, communities, local organizations, govt, NGOs, external actors involved in SP related activities • Mobilization of local bodies – Hhs, user goups, cooperatives, social mobilizers, NGOs, others… • More participatory • More accurate information on informal SP, remittances,…. - Better to account for the demand aspects: What are the risks people are concerned of the most? Suman

17. GAMSA HAMNIDA Suman