In Defence of Social Protection

THE HORIZON

By KAYODE KOMOLAFE; kayode.komolafe@thisdaylive.com 0805 500 1974

In what could somewhat be regarded as a parting shot, the outgoing Managing Director of the IMF, Christine Lagarde, recently made a case for greater social investments so as to strengthen the global economy.

According to the lady, who has been nominated as the President of the European Central bank, “social spending is not just an expense, but rather can be among the wisest of investments in the well-being of our societies.

“Expansion of access to education and health generates broader productivity across the population, allowing all citizens to flourish. To reap the rewards of stronger global economy societies must begin by strengthening social programmes today…”

Lagarde spoke at a forum organised to celebrate the centenary of the International Labour Organisation (ILO). Incidentally, July marked the 75th anniversary of the conference of 44 nations in Bretton Woods, United States, that led to establishment of   the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), now part of the World Bank Group. 

The historical context of Lagarde’s support for social investments is relevant to the rather non-structured debate in Nigeria on the imperative of social protection.

It essentially amounts to a rethink, if not a paradigm shift, for an IMF chief to make a case for social investments as part of the strategy to ensure social protection. Social protection has not always been a priority of the Bretton Woods institutions. In the 1980s, the components of the infamous Washington Consensus were the gospel truth of economic thinking. The consensus was that of the IMF, World Bank and the American Treasury Department. This consensus was the basis of the ruinous Structural Adjustment Programme (SAP) introduced in Nigeria 33 years ago. 

Since then, policy makers and their thinkers have hardly diverged from the basic economic logic that informed the Washington consensus. 

When the pains of SAP became obvious even in the early days of its imposition, it was the ILO and other development institutions that were harping on the “social costs “of the adjustment. After all, the retrenchment of workers and reduction in the values of wages resulting from the mix of neo-liberal policies naturally drew the attention of the ILO. 

However, the IMF and the World Bank would rather focus on the main components of the Washington Consensus namely privatisation, trade liberalisation, deregulation, fiscal adjustment, tax reforms competitive exchange rates etc. Social spending was not a priority in the economic strategy in which the role of the state in the economy was to be drastically reduced. Compliance with the content of the Washington Consensus became a condition for accessing foreign loans and debt management.

In Nigeria, the drivers of SAP were so self-assured in their economic arguments that the mantra was that “there is no alternative to SAP.”  At a point, eminent economist, Professor Sam Aluko reminded the high priests of SAP that “economics itself is a science of alternatives” and there was nothing without alternatives. Aluko posited that “even life itself has an alternative” and that “the alternative to life is death.” 

However, in reflecting on the place of social protection in Nigeria’s economic management especially in the last 40 years or so, some points must be readily conceded. 

First, at the advent of the disruptive SAP there was a culture of robust discourse on economic policies in the public sphere. The idea of SAP was well debated by experts and non-experts alike. For instance, workers, students, market women taxi drivers etc. freely expressed their views in the IMF loan debate of 1986. Experts and other intellectuals of divergent ideological hues held seminars in the course of the national debate launched by the military administration of President Ibrahim Babangida. 

Secondly, those who were driving SAP actually engaged with the public and stoutly defended their controversial programme. A good job of this was done by eminent ministers in the administration such as Dr. Kalu Idika Kalu, Dr. Chu Okongwu and Chief Olu Falae, an economist and a very powerful Secretary to the Government of the Federation, who was very bullish in marketing SAP. By the way, highly respected economists such as Kalu, Okongwu and others   have also had experience at the Bretton Woods institutions at a point in their illustrious careers. This factor further problematised the sale of SAP in the Nigeria’s policy market given the widely held perception that IMF and World Bank-supported programmes had scanty social content. 

This probably informed the point generally made by all the articulate promoters of SAP on the importance of social spending. According to them, publicly owned business should be privatised because “government has no business doing business.” The official argument then was that government should invest in quality public schools and hospitals rather than owning hotels, airlines or textile factories. 

In the light of Nigeria’s recent economic history, therefore, social protection should not require a strenuous defence today because even in the heyday of SAP the social content of policy was not completely ignored in Nigeria.  And that was not only at the level of rhetoric. Along with privatisation, liberalisation, devaluation, massive job loss, the Babangida administration established the Peoples Bank (and even made the legendary Tai Solarin as the Chairman to give it a stamp of integrity!), the National Directorate of Employment (NDE), the Directorate of Food, Roads and Rural Infrastructure (DFRRI) etc. So, if you like, `even SAP advocates in Nigeria made more than a mere allusion to some social protection in the design and the articulation of the strategy. 

That’s why those in charge of policies today should not behave as if economic management begins in Nigeria on the day, they take the oath of office. They may have one or two lessons to learn from the failures and successes of the past. 

In a similar vein, even the Bretton Woods institutions have now joined the ILO in paying a greater attention to social spending for the ultimate aim of achieving social protection. After all, social protection is achievable only with a mix of policies conceived to reduce poverty and bridge the gap of inequality. Hence, the World Bank is supporting the stopgaps contained in the Nigeria’s National Social Investments Programmes (N-SIPs). Increased allocations for health and education in the budget could be   a long-term antidote for the chronic malaise of poverty. The interventionist social investments are immediate and temporary dosages needed by some of the victims of poverty in the acute condition. Their poverty condition is the worst. Hence, a time frame is often set for the implementation. 

That is a way of looking at the essence of the Buhari’s social investments namely the Conditional Cash Transfer (CCT), National Home-Grown School Feeding Programme (NHGSFP), the Government Enterprise and Empowerment Programme (GEEP) and the skill acquisition N-Power.  The funding of these programmes is part of the national budget passed by the National Assembly. It is also part of the requirements that a micro-business beneficiary of GEEP to have a Bank Verification Number (BVN) since disbursement of funds is done through the banks. That is why it becomes strange when even public intellectuals accuse Vice President Yemi Osinbajo of parading market places to distribute money to traders in a grand “vote-buying” strategy.  

Yet, there is the urgent need to ponder the significance of the programme.  Targeted at the most vulnerable in the society, the CCT could make a world of difference to the economy of a poor household, albeit temporarily, if honestly implemented. It is, perhaps, understandable while some well- fed members of the elite cannot fathom the social significance of the N5, 000 monthly for a man living on less than N300 a day. 

Take a sample!  A middle-class element, for whom the list of economic problems does not include lack of three square meals a day, can afford to dismiss the CCT as “a waste.” He may even begin to give us economic lectures on how the money could be better invested in some phantom productive sectors. There is, however, an urgent question often ignored by the likes of our hypothetical fellow. He goes to his village only to be confronted by the pathetic story   of his 75-year old aunt without socio-economic support whatsoever from anywhere. The poor woman has not eaten for two days before his arrival! For heaven’s sake, will this gentleman dip his hand into his pocket to give this unfortunate aunt even N500 or will he give her some economic lectures on some “efficient productive investments”?  

The truth which no one is proclaiming is that Nigeria lacks only a systematised social security system. This is because virtually everyone of means is actually a one-man social security outfit. Most of the text messages some middle-class elements with incomes receive are pathetic stories of relations, friends and acquittances in need of some urgent financial support. A lot of the billions of dollars remitted by Nigerians in the Diaspora are actually meant to meet such needs that a well -established social security system should take care of ordinarily.  

For some of the beneficiaries of CCT especially in the remote areas, it is possibly their first experience of feeling the impact of a government policy in such a direct manner. Some disdainfully call the transfers handouts. Yes, in some situations the handouts could indeed be life-saving for some of the beneficiaries. 

The CCT has models of implementation in Brazil, Mexico other places. For instance, the World Bank-assisted programmes in Honduras has reportedly reduced the poverty gap by 27% for thousands of beneficiaries. Similarly, the population of underweight children who are under five has been reduced by 26%. With the equivalent of about   $225 dollars only transferred to each of the benefiting households in a year, access to basic education and healthcare was reported to have improved. The success of the Honduran experiment is such that a law has been made to back the policy of devoting 10% of a national trust fund to CCT.

The foregoing is far from suggesting that the implementation of the social investments is not deserving of thorough interrogation.  The way to go about it is not to denigrate an idea that has been universally acclaimed to be efficacious as a weapon of poverty alleviation. The implementation should rather be properly   critiqued for better performance. 

For instance, the coverage of the programme in a few states since the launch in 2016 has remained unacceptably inadequate. Given the poverty spread in Nigeria, the implementation of the programme so far is akin to darkening the colour of a big lake by pouring a few barrels of ink into it.   

The presidential aide on social investments, Mrs. Maryam Uwais, has, of course, reminded the public of the obvious fact that funding is the problem.  Sourcing for funds for the investments as a policy priority should be taken more seriously by the government. The World Bank Group Board of Directors approved for Nigeria a $500 million credit from the International Development Association (IDA) in support of the programme. 

Besides, the implementation agencies should be   better institutionalised. Is there anything to borrow from the Peoples Bank idea in implementing the empowerment and enterprise component of the policy? It is time the policy was reviewed.

There should be a more inclusive deployment of technology to make the implementation more efficient. Special consideration should be given to those in the remote areas.

Doubtless, the policy is in dire of better articulation. With three years of implementation, even professors still appear on television to either deny the existence of the programme or pooh-pooh it. The challenge of articulation is, therefore, quite clear in this regard. The government should engage not only with the beneficiaries, but also the larger public on the workings of the programmes in the search for improvement.

Above all, the implementation should be fraud-proof. The officials should be wary of those who may like to corrupt the process even at the lowest point of implementation. Honesty of purpose is the greatest asset the programme currently has going for it. Mrs. Uwais, for instance, responds promptly and courteously to complaints and absorbs criticisms constructively.  That should even be improved upon.

As attested to by the Bretton Woods institutions, social protection is undeniably central to any credible poverty reduction strategy.

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“Social protection is undeniably central to any credible poverty reduction strategy”