Basma Yassa - Senior Research Assistant, IFPRI
The economic impacts of the COVID-19 pandemic have imposed unprecedented increasing pressure on global poverty levels. In response, governments have rapidly resorted to the use and the expansion of social safety nets to safeguard the most vulnerable from the negative implications of the outbreak of COVID-19. IFPRI held the 33rd seminar in the Evaluating Impact and Building Capacity seminar series on Tuesday, September 22 on the topic of “COVID-19 and Social protection: From Effective Crisis Protection to Self-Reliance.” The Seminar aimed to discuss the global policy response to COVID-19 pandemic highlighting the role of social safety nets in mitigating the adverse impacts of COVID-19 crisis and Egypt’s implemented policy measures and strategies to prevent further prevalence of poverty and to strengthen overall economic resilience through social protection systems.
Dr. Dan Gilligan, Senior Research Fellow and Deputy Division Director at IFPRI, discussed the prominent role of social safety nets, at the national and the global level, as an immediate policy response in containing COVID-19’s devastating economic effects. In response to the COVID-19 crisis, global social protection measures have drastically increased amounting to US$ 800 billion in 119 countries. Such increase is justified by the growing global evidence for the effectiveness of social protection programs in reducing the vulnerability of the poor, improving food security and strengthening human capital and health levels, especially in crisis periods. Dr. Gilligan proposed that social safety nets should also be tailored in crisis periods through altering delivery methods, temporarily eliminating conditions for assistance, expanding targeting, strengthening coverage and fiscal support for the social assistance response and most importantly responding to the crisis with “the future in mind”. The effectiveness of social safety nets, at the national level, is also supported by the success of Egypt’s Takaful and Karama program increasing monthly household expenditures and food expenditures by 7.3 percent and 8.3 percent, respectively.
Dr. Heba Elaithy, Professor at Cairo University, discussed further research-based evidence on the impacts of COVID-19 on Egyptian households and further affirmed the role of social safety nets in cushioning households from the surging economic pressures in light of COVID-19 crisis. Based on the HEICS last survey round, 73 percent of households reported decrease in income levels that mainly resulted from nation-wide precautionary measures, job losses and lower overall demand. Dr. Elaithy quoted that “31.8 percent of households in urban areas and 34.3 percent in rural areas reported inadequate income levels to meet their needs”. COVID-19 economic repercussions have also changed households’ consumption patterns due to the lower income levels accompanied with higher general prices. The required increase in households’ consumption of medical supplies and detergents have forced them to decrease their consumption of some basic commodities. In fact, 74 percent of households reported a decrease in household consumption of relatively expensive food commodities such as meat, poultry and fish shifting towards cheaper commodities such as rice, edible oil and legumes.
COVID-19 adverse economy-wide implications have resonated to the Egyptian labor market leading to soaring unemployment levels. Dr. Elaithy research shows that 55.7 percent work fewer hours and days, while 26.2 percent of the interviewed individuals became unemployed and 18 percent of them work intermittently.
The Egyptian government, in response to the economic implications of COVID-19 outbreak, had expanded the coverage of Takaful and Karama Program as 100,000 beneficiaries were enrolled in the program in April 2020. The significant impact of Takaful and Karma on poverty reduction is evident as the results of a simulation study show that in the case of a counterfactual without any cash transfers, poverty rates would have reached 30.9 percent compared to 28.1 percent under Takaful and Karama Program.
Ms. Nahla Zeitoun, Senior Social Protection Specialist at the World Bank, highlighted the main short-term and medium-term proposed social response measures related to the COVID-19 response strategy for Egypt. Egypt’s immediate response encompassed a horizontal rather than vertical expansion of Takaful and Karama program through the revision of Proxy-Means-Testing (PMT) threshold to allow eligibility for the most directly/indirectly affected by COVID-19 outbreak. Expansion of Takaful and Karama was complemented by the introduction of a one-time 500 EGP cash transfer offered to informal and irregular workers for 3 months who are highly exposed to the risk of falling into poverty. Other measures in the short-term were proposed but not implemented such as the expansion of nutrition-sensitive assistance programs through increasing food subsidies and school meals to reduce households’ expenses. The proposed medium-term response is comprised of implementing labor intensive public works in the post-crisis period, expanding healthcare, social housing and public transportation subsidies for the poor, scaling-up graduation programs to permanently move households out of poverty, increasing financial inclusion especially for micro and small entrepreneurs and promoting overall financial literacy.
In addressing the fiscal costs and sustainability dimension of social safety net programs, Dr. Atef El-Shabrawy, Advisor to the Ministry of Social Solidarity and Director of FORSA program, presented MoSS new FORSA program: a graduation program for Takaful and Karama beneficiaries. Forsa graduation program is a critical step to ensure the future sustainability of the social protection system in Egypt as it enables households to exit poverty preventing long-term reliance on cash transfers, which creates space in the program for new households. The program incorporates innovative design choices for the asset transfer and employment/job-matching modalities with active collaboration with the private sector and NGOs.
Conclusion
COVID-19 pandemic’s profound negative consequences have imposed salient risks to the poor and the most vulnerable, which emphasizes the paramount importance and role of robust social protection systems in stifling these adverse impacts. Yet the expansion of social protection systems must be governed by an overarching theme of “keeping the future in mind”, as Dr. Gilligan highlighted. This necessitates prioritization of important features in designing social protection programs such as nutrition and gender sensitive social assistance and further investments in mobile and electronic payments. The growing significance of digitization of payments and cash transfers was also highlighted by Ms. Nahla Zeitoun, especially in light of COVID-19 pandemic.
Ms. Zeitoun also emphasized the necessity of building on the current infrastructure in Egypt through the integration of Unified National Registry and Ministry of Social Solidarity Social Registry to improve households’ profiling and the targeting of social safety net programs. In parallel, greater reliance on remote communications and interaction could be strengthened through utilizing the full potential of existing systems such as MoSS automated Grievance Redress Mechanism (GRM) developed for Takaful and Karama Program.
Lastly, the sustainability dimension of social safety net programs, as discussed by Dr. Atef, sheds light on the vitality of graduation programs such as the Forsa Intervention to prevent indefinite long-term dependency on cash transfers. Effective “graduation” from poverty will ensure strengthening the resilience and sustainability of poverty-reduction interventions and social protection systems.
