Smoke and mirrors
The role of World Bank and IMF in
shaping social security policy in the
MENA region
Sarina D. Kidd
ISSPF Working Paper Series:
Shifting the Paradigm
April 2022
Issue: 04
Executive summary
i
Executive summary
Countries in the Middle East and North Africa (MENA) region face a number of challenges,
including fiscal instability, conflict, civil unrest and high unemployment. A robust social
security system is an essential means of reducing inequality and increasing the economic
growth of a country. However, across the MENA region, social security systems are failing
to reach the majority of the population. Further, while fuel and food subsidies have
historically been regarded as the main means of delivering a degree of income security
for much of the population, these measures have been scaled back in recent years. The
schemes that are designed to compensate for such subsidy removal, however, are limited
in reach and, as a result, many people receive less from the State than before. This is
especially an issue when, across Arab States, there are widespread low incomes and high
rates of inequality.
The International Monetary Fund (IMF) and the World Bank are two of the most significant
international financial institutions (IFIs) in the MENA region. They have played a critical
role in influencing social policy, encouraging countries – through the provision of loans
and technical assistance – to introduce austerity measures in order to scale back fiscal
costs. The most significant means in which the IFIs impact on social security policy is
through the provision of loans to governments. These loans are often attached to
conditions linked to disbursement, and may specify, for example, that a country must
implement a social registry (a mechanism for undertaking poverty targeting) or introduce
sanctions. If the condition is not met, disbursement, or a tranche of the funds, may be
withheld. It can be extremely difficult for a government to change the design of a social
security scheme if it does not align with one of the conditions in the loan.
The social security package that the World Bank and IMF promote
When promoting structural adjustment measures – such as subsidy reform – the IMF and
World Bank generally advise that part of the savings should be re-allocated to “well-
targeted,”, “pro-poor”, “efficient” social security schemes. However, the package that is
promoted aligns with a poor relief model and is neither well-targeted nor pro-poor. This
contrasts with an inclusive lifecycle approach to social security, in which levels of
investment are high due to broad coverage and high transfer values. States are duty
bearers that are obliged to provide a minimum social security floor, which addresses key
risks across the lifecycle, including old age, disability, childhood and unemployment.
Schemes are offered on a universal or near universal basis, for social security is an
individual entitlement – that is, a human right. Components of the IFIs’ social security
packages are discussed below.
Executive summary
ii
Low Coverage
The schemes promoted by the IMF and World Bank have small budgets and low coverage.
This means that the majority of the population– i.e. the “missing middle” in the informal
economy – are not reached by either a social insurance or tax-financed scheme. For
example, in a context of fuel subsidy reform, the World Bank has supported the
Government of Tunisia to establish the Amen Social Programme to replace the Programme
Nationale d’Aide aux Familles Necessiteuses (PNAFN). The Permanent Cash Transfer (PCT)
component aims to increase coverage from 8 to 10 per cent of the population. As a result,
many Tunisians who are living on low incomes, but are not benefiting from the social
insurance system, will not receive any social security benefits.
The IFIs’ messaging can confuse policymakers and practitioners into thinking that
schemes with low coverage generate greater impacts than those with higher coverage.
For example, programmes with high coverage are often referred to as “poorly targeted”
and “inefficient” when compared to smaller poverty-targeted schemes, which the IFIs
describe as “pro-poor”. This is despite the fact that inclusive lifecycle schemes reach more
people living on low incomes due to their higher coverage. For example, in Morocco, the
World Bank noted that the government’s planned universal child benefit is “likely to be
progressive” (emphasis added), in contrast to a scheme with 40 per cent coverage, which
would be “even more progressive.” Yet, the universal scheme would be much more effective
in reaching the poorest children. Meanwhile, in Tunisia, the World Bank has argued that a
proposed poverty-targeted Family Allowance would reach a higher share of beneficiaries
in the first wealth decile than the country’s subsidy programmes, even though it would
only be provided to around 10 per cent of children aged 0-5 years. At first glance, it
therefore appears that the Family Allowance will reach far more beneficiaries in the
poorest decile than schemes with higher coverage. Therefore, it appears to the uncritical
eye to be more “pro-poor”. In absolute numbers, far more households in the lowest decile
benefit from schemes with universal coverage than from the targeted Family Allowance.
Poverty targeting
In order to implement a scheme with low coverage, the IFIs try to deliver it to the poorest
segments of the population. Identification is normally achieved through a proxy means
test (PMT). The IFIs promote the PMT as a “scientific” mechanism which they portray as
efficient and accurate. In reality, it is a highly inaccurate process, with selection often
being little more than random. For example, Egypt’s Takaful and Karama Programme
(TKP) has an exclusion error of 55 per cent for the poorest quintile and 75 per cent for the
second quintile.
These limitations are due to a number of reasons. For example, it can be difficult to
differentiate who is the poorest when the majority of persons are living on low incomes.
Executive summary
iii
Second, household income and consumption levels fluctuate, which means that
households living under the poverty line during one year are not the same as those living
under the poverty line the next. This is especially the case in countries experiencing
conflict, such as Yemen and Iraq, or those in the midst of a financial crisis, such as
Lebanon. Exclusion errors are further exacerbated in the absence of recent national
household surveys. For example, both Yemen and Lebanon’s PMTs are based on
household surveys that are more than a decade old and no longer reflect the current
situation of the countries. The PMT formulae are, therefore, highly inaccurate.
Despite evidence showing that poverty targeting results in high exclusion errors, the IFIs
continue to use language that can mislead policy makers into thinking that this is not the
case. When assessing the impacts of a poverty-targeted programme, the institutions often
undertake simulations that assume that a programme will have “perfect targeting”. The
results, therefore, exaggerate the effectiveness of a scheme.
Social registries
Linked to the implementation of a PMT is the development of a social registry. A social
registry is a database that includes household data, with the aim of selecting households
for poverty-targeted programmes through a PMT. The World Bank has supported the
implementation of social registries in countries such as Yemen, Egypt, Morocco, Tunisia,
Iraq, Palestine, and Lebanon, noting that the social registry “allows for better targeting, thus
making social transfers more pro-poor.” However, as social registries use PMTs they carry
the same design flaws as the PMT and cannot be used to accurately identify the poor.
The IFIs aim to make the social registry a gateway to coordinate countries’ social
programmes. In Morocco, for example, a World Bank loan includes a disbursement linked
indicator, specifying that the government will implement a law, setting forth that the
social registry will be the entry point for any “safety net programmes” that are introduced.
However, social registries are not designed to identify recipients for modern, lifecycle
social security systems, based on individual entitlements, as they do not hold information
on the majority of the population nor on individuals within households. By presenting
social registries as the coordinating mechanism for social security schemes, this pre-
supposes that social programmes will be household-based and poverty-targeted. It is,
therefore, a means of ensuring that countries continue to implement small, poor relief
schemes. As discussed below, Morocco is currently designing a universal child benefit.
Depending on the operational definition of “safety net programmes” it could potentially
put the universal child benefit in legal jeopardy as it will not need to utilise the social
registry.
If the World Bank wants to help countries to strengthen their delivery systems and
develop useful databases, they could do so by supporting countries to develop a Single
Executive summary
iv
Registry, and/or strengthening a civil registry, which could then hold information on the
entire population.
Household Benefits
In general, IFI-supported schemes are delivered to the household rather than to the
individual. This contrasts with an inclusive lifecycle system, in which individuals are
rights-holders who are entitled to social security. Paying benefits to a household does not
take into account the intra-household distribution of wealth and power dynamics: there is
no guarantee that all members of the household would benefit from the scheme. Further,
many people with no personal income are excluded, because their household is assessed
as non-poor. While some poverty-targeted programmes – such as Lebanon’s National
Poverty Targeted Programme (NPTP) and Yemen’s Social Welfare Fund (SWF) – target the
cash transfer at specific categories of households, including households with a vulnerable
individual, this does not address the core challenge. Unless the vulnerable individual is
the recipient of the cash by being the household head, there is no guarantee that they
will benefit from the scheme. Likewise, many persons with disabilities do not receive
income security because their households do not qualify for the programme. Jordan’s
Takaful scheme demonstrates a further limitation of household benefits: only the head of
the household may apply, which could result in the exclusion of women if they wish to
apply, but the male head of the household does not.
Conditions, sanctions and workfare
Many of the favoured programmes of the World Bank and the IMF are ones in which
recipients have to comply with certain behaviours in order to achieve their funds. This can
be in the form of a conditional cash transfer (CCT) or a workfare programme. Under
Egypt’s TKP, for example, CCTs are offered to young families under the Takaful
component, whereas unconditional transfers are offered to vulnerable categories of
people, such as older persons or persons with disabilities. Here, the “deserving” are older
people or persons with disabilities who do not need to change their behaviour, because
they are regarded as poor due to lacking labour capacity, while working age parents with
children must prove their deservingness by attending four health check-ups a year for
children younger than 6 and ensuring children aged 6-18 years attend school at least 80
per cent of the time, or risk being sanctioned by losing their benefits.
The implementation of conditions is problematic as it requires equal performance despite
unequal contexts and circumstances. Recipients are sanctioned if they do not comply,
despite their clear need. Indeed, conditions are arguably not suitable for those countries
in the MENA region that have limited services or are experiencing conflict. While the
World Bank has claimed that there is significant evidence that CCTs have had positive
impacts worldwide, global evidence points to the opposite. In Morocco, a study – partly
Executive summary
v
funded by the World Bank – found that children were more likely to attend school when
receiving an unconditional transfer, rather than a CCT which was conditional on school
attendance. Despite this evidence, it was a CCT that was established.
Undermining governments’ own paradigm shifts in policy thinking
When countries aim to introduce more inclusive lifecycle schemes, the IFIs can act to
undermine them. Morocco, for example, was the only country in the MENA region to
spend more than 2 per cent of Gross Domestic Product (GDP) on a minimally adequate
stimulus to address the impacts of the COVID-19 pandemic. The response was apparently
so popular and effective that the country has announced that it will increase its old age
pension coverage and universalise the Family Allowance Programme, a child benefit.
While the World Bank has ostensibly committed to supporting the implementation of the
Family Allowance, it has incorrectly claimed that a targeted version of the scheme would
be “even more progressive”.
Indeed, the IFIs often promote schemes with low budgets with the argument that
countries do not have the fiscal space to implement a universal lifecycle scheme. This can
be observed in Tunisia, in which a poverty-targeted Family Allowance, aimed at
households with children aged 0-5 years, is being piloted. The World Bank notes that the
full expansion of the scheme to all households enrolled in the Amen Social programme
will “cost about 0.03 percent of GDP” and that it is considerably more cost-effective than
Tunisia’s energy subsidies which amount to more than 2 per cent of GDP.
A budget of 0.03 per cent of GDP is miniscule, especially when considering the proposed
budget of Morocco’s Family Allowance, which would cost 1 per cent of GDP. The World
Bank argues that Tunisia’s small scheme is the first step towards the government
implementing a Social Protection Floor, and that it will support “progressive universality”
with the justification that there is insufficient fiscal space to implement a scheme with
higher coverage (a debatable proposition). Yet, when the Government of Morocco is
willing to develop a minimum Social Protection Floor for all children in the country, and
shows that it has the fiscal space to fund the scheme, the World Bank is still opposed.
Progressive universality under a paradigm of poverty targeting is an oxymoron. A more
effective means of promoting universality – while managing fiscal constraints – is to
deliver a lifecycle benefit initially to a specific age group – for example, all older persons
aged 80+ – and then lower the eligibility age later. Or, in the case of a child benefit, it can
be offered initially to all children belonging to a younger cohort and coverage can
increase over time if the children are not exited from the scheme until they reach 18
years of age. The paradigms that promote poor relief and inclusive lifecycle schemes are
diametrically distinct, and the gradual expansion of schemes based on the principle of
Executive summary
vi
universality entrenches a rights based approach to social security as well as greater
effectiveness, sustainability and popular support.
Consequences of the IFIs’ approach
Although the IFIs promote their approach to social security as progressive and pro-poor,
in reality, poor relief can have a range of negative consequences.
Minimal impacts on poverty reduction, wellbeing and economic growth
Tax-financed social security systems play a key role in reducing inequality by
redistributing wealth from more affluent segments of society to the rest of the
population. However, in order to achieve this effectively, schemes must be inclusive, with
high coverage and transfer levels. Tackling soaring poverty and reducing inequality also
has significant impacts on a country’s economic growth. Investment in inclusive social
security builds human capital and increase labour supply; mitigates shocks and
production losses; drives demand and economic activity; fosters social cohesion; and
reduces inequality – all of which promote a virtuous circle of economic growth and
sustained investment in social security.
An increase in shame, stigma and social tensions
Poverty targeting can dehumanise beneficiaries, making them feel ashamed and
embarrassed to be enrolled on a poor relief programme. In addition, the enforcement of
sanctions in CCTs can undermine recipients’ dignity since they are not treated as free and
autonomous agents. Poor relief can also increase social tensions in communities. This is
especially the case when people who are eligible, or who consider themselves to be living
on low incomes, are unable to access programmes. Social tensions are further worsened
by the fact that targeting mechanisms such as PMTs are often poorly understood by
communities due to their complex nature.
Weakening the social contract and limiting fiscal space
When the majority of a population do not benefit from a social security system, they are
unwilling to pay taxes to invest in it. Further, schemes that employ conditions and
sanctions, or are poverty targeted, are less likely to be enshrined in law. Therefore, the
population do not feel entitled to the scheme.
In contrast, schemes with higher coverage receive greater public support and, as a result,
are more sustainable both financially and politically. Not only do such schemes attract
higher taxes and promote economic growth, which results in greater fiscal space being
dynamically generated, but they can become an important political tool. For example,
political parties may promise to increase coverage levels, or transfer values, during
Executive summary
vii
elections, which, when done well, can strengthen democracy. They are also, not
surprisingly, more likely to be grounded in legislation as enforceable rights.
In fact, inclusive lifecycle schemes attract higher investment over time due to their
popularity. Therefore, greater fiscal space grows out of the universality of social security
schemes.
In a region where trust in the state to implement effective social security systems is low,
it is essential that governments implement programmes that reach more than just a small
section of the population. Schemes with broader coverage are important if states are to
win the trust of their populations. For example, in 2017, Iran decided – with
encouragement from the IMF – to target its universal cash transfer scheme (which had
been implemented to compensate for subsidy reform measures). In a context of declining
living standards, the reform proved to be extremely unpopular, leading to protests in
December 2017.
Undermining countries’ abilities to build progressive, modern systems
The promotion of poor relief schemes has limited countries’ abilities to build modern,
inclusive social security systems. This has been especially noticeable during the COVID-19
pandemic, in which Morocco was the only country in the MENA region to invest at least 2
per cent of GDP in a social security response, which has been suggested as a minimally
adequate fiscal stimulus to support economic recovery. It is no surprise that, out of all the
countries in the MENA region, Morocco is the only one that now appears to be making
significant strides towards strengthening its old age pension and child benefit schemes.
Poor relief schemes continue to be promoted by the IFIs to address the impacts of the
pandemic. This reality in the MENA region contrasts with the rhetoric that the IFIs have
provided about the COVID-19 pandemic. For example, the World Bank has stated that:
“Governments should consider developing integrated, universal social protection systems to
support both the goal of achieving universal social protection by 2030 and the goal of
accelerating the growth of better jobs.” However, this is window dressing and not reflective
of what is occurring on the ground. The continuing promotion of poor relief schemes,
which operate under a neo-liberal paradigm and utilise poverty narratives, will hinder
governments’ attempts to shift to a rights-based paradigm.
Why do IFIs promote poor relief schemes?
There are many reasons why the IMF and World Bank promote poor relief schemes. Firstly,
they are guided by ideological thinking. As discussed above, low levels of investment in
social security systems align well with a neo-liberal vision of low taxes and a small state.
Executive summary
viii
This viewpoint is likely exacerbated by negative poverty narratives, which can justify why,
for example, conditions and sanctions should be attached to benefits.
Second, the IFIs’ messaging – even when it ignores global evidence – creates smoke and
mirrors that confuse policy makers. In Mongolia, for example, the World Bank stated that
the universal child benefit was “not … well-targeted and not effective in protecting the poor”,
despite the scheme reaching virtually all children living on low incomes. Policymakers
and practitioners who do not necessarily hold negative poverty narratives themselves,
could therefore be misled by the IFIs’ messaging into thinking that poor relief schemes
are indeed more effective at alleviating poverty. Or, they might come to believe that there
is no fiscal space to gradually implement a universal lifecycle system.
Third, there are financial incentives to what the IFIs do because ultimately, the IFIs are a
combination of banks that have to lend money to survive and consultancy firms that have
to cover their staff costs. A social registry, for example, is a product that the World Bank is
promoting strongly globally, as it can be financed by a loan and give work to the
institution’s staff. In addition, poor relief schemes – through the introduction of
conditions or workfare – can be sold as productive programmes to governments, who
would never dream of taking a loan for an unconditional poor relief programme or,
indeed, for universal schemes.
Finally, inclusive lifecycle schemes reduce the IFIs’ influence in a country. The IFIs would
have countries believe that modern lifecycle schemes are not good for business, when, in
fact, the opposite is true. Although the IFIs argue that lifecycle schemes are not efficient,
and that they cost too much to be fiscally sustainable, as discussed above, schemes with
high coverage are more popular and therefore, taxpayers are more willing to fund them.
Consequently, as countries transition towards implementing lifecycle schemes which
receive support from large sectors of the population, governments are less likely to take
out loans, and the IFIs lose their influence in the country.
Conclusion
The MENA region is at an important juncture. With subsidy reform looming large and the
impacts of the COVID-19 pandemic likely to be felt for years to come, it is now more
important than ever that the region experiences a paradigm shift in its approach to social
security. Despite evidence showing that inclusive, lifecycle schemes are more effective at
reaching persons living on low incomes, the IFIs often use smoke and mirrors to persuade
policy makers that this is not the case. Although the IFIs claim that poor relief schemes
are “pro-poor”, only a small segment of low-income households are actually reached. In
reality, therefore, the IFIs’ approach to social security is pro-rich, since a smaller social
security system entails low taxes, which benefits the rich. Further, when a government
Executive summary
ix
moves towards implementing an inclusive, modern lifecycle social security system, it is
also taking measures to reduce the IFIs’ influence within the country. This can help
explain why there is a reluctance from the World Bank and IMF to promote fiscally and
politically sustainable schemes.
There are some indications of paradigm shifts within the MENA region. Morocco, for
example, has announced that it will universalise its child benefit and increase the
coverage of its old age pension. However, without a serious shift in institutional approach,
the two IFIs will hinder governments’ attempts to develop inclusive, modern social
security systems, build the social contract and drive economic growth. More worryingly,
poor relief, if it continues as the dominant approach, will continue to undermine trust in
government, weaken the prospects for democracy, and increase the risk of social unrest,
the last thing that the region needs.
Acknowledgements
x
Acknowledgements
This working paper was produced with funding from a Ford Foundation grant titled
“Shifting the paradigm: building inclusive, lifecycle social security systems in the MENA
region”.
1
The report was prepared under the guidance of Shea McClanahan (Development
Pathways) and Stephen Kidd (Development Pathways) and has benefited from valuable
comments and feedback from Alexandra Barrantes (Development Pathways) and Chafik
Ben Rouine (Tunisian Observatory of Economy). Daniel Hughes (Development Pathways)
provided research support.
1
This work is licensed under the Creative Commons Attribution 4.0 International License. To view a copy of this license,
visit http://creativecommons.org/licenses/by/4.0/ or send a letter to Creative Commons, PO Box 1866, Mountain View, CA
94042, USA.
Table of contents
xi
Table of contents
Executive summary ......................................................................................................................... i
Acknowledgements ........................................................................................................................ x
Table of contents .......................................................................................................................... xi
List of Acronyms ........................................................................................................................... xii
1 Introduction ............................................................................................................................ 1
2 Context .................................................................................................................................... 4
3 The World Bank and IMF’s Approach to Social Security .................................................... 8
3.1 Low coverage ................................................................................................................................... 9
3.2 Poverty targeting ......................................................................................................................... 15
3.3 Social registries ............................................................................................................................ 18
3.4 Household benefits ..................................................................................................................... 20
3.5 Conditions, sanctions and workfare ...................................................................................... 22
3.6 Undermining more universal schemes ................................................................................ 25
3.7 The IFI approach in the MENA region can be found around the world ................... 28
4 Consequences of the World Bank and IMF’s approach ................................................... 29
4.1 Minimal impacts on well-being and economic growth ................................................. 29
4.2 Shame, stigma and social tensions ....................................................................................... 31
4.3 Weakening the social contract and limiting fiscal space ............................................. 33
4.4 Accountability of governments to their populations is weakened ............................ 35
4.5 The ability of countries to build inclusive, modern systems is undermined ......... 35
5 Why do the IFIs promote poor relief schemes? ............................................................... 37
6 Conclusion ............................................................................................................................ 39
Bibliography ................................................................................................................................. 41
List of Acronyms
xii
List of Acronyms
CCT
COVID-19
GDP
IFI
IMF
LCT
MENA
MIS
NAF
NPTP
PCT
PDS
PMT
PNAFN
PNCTP
PPP
SWF
TKP
UCT
US$
Conditional Cash Transfer
Coronavirus Disease 2019
Gross Domestic Product
International Finance Institute
International Monetary Fund
Labelled Cash Transfer
Middle East and North Africa
Management Information System
National Aid Fund
National Poverty Targeting
Permanent Cash Transfer
Public Distribution System
Proxy Means Test
Programme Nationale d’Aide aux Familles Necessiteuses
Palestinian National Cash Transfer Programme
Purchasing Power Parity
Social Welfare Fund
Takaful and Karama Programme
Unconditional Cash Transfer
United States Dollars
1 Introduction
1
1 Introduction
Countries in the Middle East and North Africa (MENA) region face a number of challenges,
including fiscal instability, conflict, civil unrest and high unemployment. A robust social security
system
2
is an essential means of reducing inequality and increasing the economic growth of a
country. However, across the MENA region, social security provisions are inadequate and fail to
reach the majority of the population.
The International Monetary Fund (IMF) and the World Bank are two of the most significant
international financial institutions (IFIs) in the region. They have played an important role in
influencing social policy, encouraging countries – through the provision of loans and technical
assistance – to introduce austerity measures in order to scale back fiscal costs. Measures
include subsidy reform, the means testing (or poverty targeting) of social security schemes,
labour market reform, and consumption tax increases.
3
However, many of these measures have
been criticised for having contributed towards rising poverty rates, reduced living costs, riots
and civil unrest.
4
Since the 2011 Arab uprisings, the IFIs have ostensibly tried to reduce these
negative impacts – for example, by promoting social security schemes as a means of mitigating
the effects of economic adjustment policies.
5
As such, the two IFIs have played a significant
role in shaping social protection and social security policy around the world: according to Kidd
(2018a), in 2017, almost 10 per cent of lending by the World Bank to low-income countries was
linked to social protection, while 10 per cent of IMF loans included conditions linked to such
schemes.
However, not all social security schemes are equally effective and, if badly designed, a
programme can be inadequate, poor performing, or even have negative impacts. Broadly, there
are two approaches to designing social security programmes. Under an inclusive lifecycle
approach, levels of investment are high due to broad coverage and high transfer values. States
are duty bearers obliged to provide a minimum social security floor, which addresses key risks
across the lifecycle, including old age, disability, childhood and unemployment. Schemes are
2
The term “social security” is used throughout the paper to refer to income transfers, regardless of how they are financed. While
“social protection” is the prevailing term that is used within the sector, the term “social security” is preferred by the author as it
aligns with the right to social security, as enshrined in the Universal Declaration of Human Rights.
3
International Labour Organization & World Bank (2016).
4
See, for example: Abdo (2019); Bretton Woods Project (2018, 2019); ESPI (2018).
5
Mossallem (2015).
1 Introduction
2
offered on a universal or near universal basis, since social security is an individual entitlement
– in other words, a human right (see Box 1).
In contrast, the IFIs promote a poor
relief package, in which schemes
have low budgets, low coverage, and
are targeted at households living in
poverty. Such schemes have an
ideological underpinning, supporting
a neo-liberal vision of low taxes and
a small State. Poor relief programmes
have been criticised for being too
small to reach all households living in
poverty.
6
As such, they are not able –
on their own – to address soaring
poverty rates and promote economic
growth.
Amid this criticism, the IMF and World Bank have signalled an ostensible paradigm shift in their
approach to social security. In 2016, the World Bank launched a global partnership with the
International Labour Organization (ILO) to promote universal social protection, with the World
Bank stating that: “Universal coverage and access to social protection are central to ending poverty
and boosting shared prosperity.”
7
Further, in 2018, the IMF Board detailed that “the IMF needs to
find more realistic and effective approaches to program design and conditionality to ensure that
adverse impacts of program measures on the most vulnerable are mitigated.”
8
A year later, the IMF
noted that it “does not have any bias in favour of one approach” with regard to universal or
targeted social security schemes, but that the “appropriate use of targeted and universal-type
transfers will depend on country economic, political, and social circumstances and constraints.”
9
This paper examines whether this paradigm shift has been observed within the MENA region, or
whether the social security packages that the IFIs promote are business as usual. It further
investigates whether the IFIs are putting in place the necessary building blocks to assist
countries in developing an inclusive, lifecycle social security system that will meet the IFIs’
supposed aim of achieving universal coverage, or whether the structures that are being pushed
will hinder the development of such systems. The paper also examines how the IFIs present
evidence and whether the language that is used is accurate, or whether it is designed to
confuse policymakers so that they are steered towards a particular ideological approach.
6
See, for example: Kidd, Athias, and Mohamud (2021).
7
International Labour Organization & World Bank (2016).
8
IMF (2018b).
9
IMF (2019).
Box 1: The right to social security in the Universal Declaration
of Human Rights
Article 22: “Everyone, as a member of society, has the right to
social security”
Article 25: “(1) Everyone has the right to a standard of living
adequate for the health and well-being of himself and of his
family, including food, clothing, housing and medical care and
necessary social services, and the right to security in the event
of unemployment, sickness, disability, widowhood, old age or
other lack of livelihood in circumstances beyond his control. (2)
Motherhood and childhood are entitled to special care and
assistance. All children, whether born in or out of wedlock,
shall enjoy the same social protection.”
1 Introduction
3
Section 1 provides a brief overview of the context of the MENA region and its social security
systems. Section 2 then breaks down the components of the social security packages that the
two IFIs promote. Section 3 looks at the consequences of these packages, and Section 4 seeks
to explain why the IFIs promote the schemes that they do.
2 Context
4
2 Context
Although no two countries in the MENA region are the same, broad patterns can be drawn
between them. Across MENA States, there are widespread low incomes, high rates of informal
employment and high rates of inequality. Poverty rates, which have likely worsened during the
COVID-19 pandemic, are on the rise and, according to the World Bank, extreme poverty
increased from 3.8 per cent in 2015 to 7.2 per cent in 2018.
10
However, it should be emphasised
that a high proportion of the MENA population – not just those who have been classified as
living in extreme poverty – are living on low incomes.
11
For example, in 2018, around 45 per
cent of the population were living on less than USD 5.50 (PPP) per day.
12
In addition,
households fluctuate in and out of poverty, depending on the shocks that they experience. This
is exacerbated in countries experiencing conflict, such as Yemen and Iraq, or those in the midst
of a financial crisis, such as Lebanon. Indeed, because a household’s welfare can change
dramatically over a very short period of time, some have argued that “the poor” is a fictional
construct rather than a fixed group that could be identified at any given moment.
13
10
World Bank (2020a).
11
Extreme poverty is described, by the World Bank, as living on less than USD 1.90 per day (PPP).
12
Sibun (2021).
13
Knox-Vydmanov (2014).
2 Context
5
Figure 1: Depiction of the type of bifurcated social security system found in many low- and
middle-income countries
Source: Development Pathways’ depiction.
While social security is an important means of reducing inequality and lowering a country’s
poverty headcount, the systems in place across the MENA region are not fit for purpose. For the
upper segments of society, social insurance provisions are generally available, although in need
of reform. However, for those on low or middle incomes, or who are outside the formal
economy, often the only means of accessing social security is through a small, poor relief
scheme targeted at the poorest households. In Lebanon, for example, 6.5 per cent of the
population are receiving a tax-financed benefit and around a third are receiving a contributory
benefit.
14
As a result, many households living on low or middle incomes – which are still low –
or who have a household member working in the informal economy, are unable to access either
a social insurance scheme or a poor relief one. As Figure 1 indicates, this sector of the
population – which often forms the majority within a country – are the “missing middle”.
14
International Labour Organization & UNICEF (2021).
2 Context
6
Box 2: Subsidy reform is a fundamental part of the MENA context
Food and fuel subsidy reform accelerated in the 1990s, often with support from the IMF and the World Bank.
Reforms are generally extremely unpopular, resulting in protests and civil unrest. This unpopularity is due, in part,
to the fact that subsidies are often universal, or nearly universal, and their removal impacts on people across the
income spectrum, including more politically engaged families living on middle and high incomes, as well as those
working in the informal sector.
15
Given the opposition to subsidy reforms, the process has not been consistently implemented. For example, after
the 2011 uprisings, several countries scaled back their subsidy reforms including Jordan, Tunisia and Yemen, even
when the reforms were a requirement of the loans they received from the IFIs. Other countries, such as Egypt and
Morocco, have been more successful at implementing reforms, although Walsh and Boys (2020) explain that
these reforms excluded Liquid Petroleum Gas, which is more commonly used by the poorer segments of society.
Iran, meanwhile, successfully removed fuel subsides in 2011, by introducing a universal cash transfer programme
to compensate all citizens across the income spectrum.
In more recent years, subsidy reform has continued to be a major policy requirement of the IMF and the World
Bank. For example, Egypt’s recent fuel subsidy reform – which accelerated in 2014 – was supported both by the
World Bank and the IMF. For example, the World Bank provided technical assistance through the Energy Sector
Management Assistance Programme. Further, between 2016 and 2019, Egypt implemented a number of fiscal
reforms, including fuel subsidy reform, backed by a USD 12 billion IMF loan.
16
In Iraq, meanwhile, the IMF has
continually pushed for a reduction in Iraq’s food subsidy programme, the Public Distribution System, which, in
2021, was estimated to have 96 per cent coverage.
17
In 2017, the institution criticised the scheme for a “lack of
targeting, which leads to unnecessarily high outlays and an inequitable distributional impact.”
18
In the IMF’s 2020
Article IV report, the IMF stated that eligibility for the PDS should be limited and that the “authorities agreed with
the need to reform the PDS system and plan to take this up in the next stage of their reform agenda.”
19
Historically, the main form of tax-financed income support has been through the provision of
food
20
and fuel price subsidies, which are currently undergoing reform in a number of countries
across the region, as explained in
Box 2. Coverage of these systems was – and still is – high in
many countries and, as a result, subsidies have had a significant impact on poverty reduction. In
Egypt and Iraq, for example, Silva et al (2013) found that food ration cards reduced the poverty
headcount by more than 30 per cent. Although food subsidies are typically progressive because
poorer households tend to spend proportionately more on food, fuel subsidies
disproportionately benefit wealthier households and contribute to a large fiscal deficit. They
also divert States from investing in more effective systems, such as a tax-financed social
security scheme.
21
Nevertheless, they are often the only schemes that provide income security
15
See, for example, Sdralevich et al. (2014).
16
ESMAP (2019); IMF (2016).
17
Breisinger et al. (2021); Savage & Labs (2021).
18
IMF (2017a).
19
IMF (2021).
20
Food subsidies include a number of different types of subsidies, including ration-card system, subsidies on prices, subsidies on
production, etc. However, a separate analysis for each type is beyond the scope of the report.
21
Breisinger et al. (2019).
2 Context
7
to the “missing middle”. Over the last decades, many governments – with the support of the
IMF and the World Bank – have increased their attempts to phase out price subsidies. However,
unless price subsidies are replaced by compensation schemes with high coverage, subsidy
reform is generally extremely unpopular.
In a context where economic, social and
cultural rights are largely limited, the social
contract between citizens and the state is
considered by many to be absent or broken.
22
The historical importance of subsidies in the
region – as well as their universal, or near
universal coverage – has meant that subsidies
form an important element of an unwritten
social contract.
23
However, with subsidies being
scaled back, it is important that they are
replaced by social security schemes that are
sufficiently redistributive and effective to
develop and strengthen state-society relations.
24
22
Devereux (2015).
23
El-Katiri & Fattouh (2017). In addition, low salary competitiveness at the core of social/economic contract forcing the State to
maintain low prices for basic foods.
24
Kidd, S. et al. (2020).
Box 3: What is a social contract?
At a simple level, a social contract can be
understood as an agreement between citizens and
government. When it functions well, citizens and
residents pay taxes to the government and, in
return, the government should use these revenues
to provide good quality public services,
infrastructure and protection. As long as both sides
keep to the agreement, a functioning, decent and
fair society can exist. However, if governments do
not fulfil their side of the bargain, many will resent
paying taxes and, often, actively avoid doing so.
Taken from Kidd, S. et al (2020)
3 The World Bank and IMF’s Approach to Social Security
8
3 The World Bank and IMF’s Approach to Social
Security
The most significant means through which the IFIs impact on social security policy is via the
provision of loans to governments. Loans are often attached to conditionalities: in the case of
the World Bank, these are, for example, Performance Based Conditions (formerly called
Disbursement Linked Indicators) or Quantitative Performance Criteria and, for the IMF,
Structural Benchmarks. These conditions – which may specify, for example, that a country must
implement a social registry (a mechanism for undertaking poverty targeting – see Section 3.2)
– can be linked to disbursement. Therefore, if the condition is not met, disbursement, or a
tranche of the funds, may be withheld. As Kidd (2018a) notes, it can therefore be extremely
difficult for a government to change the design of a social security scheme if it does not align
with one of the conditions in the loan. He explains, for example that: “Mongolia was threatened
by the IMF and World Bank with the withholding of loans unless it targeted its popular universal
child benefit, with the government eventually acquiescing in January 2018.” Even in countries such
as Iran which do not receive loans, the impact of the IFIs should not be discounted: for
example, the IMF still holds considerable influence with regard to Article IV surveillance.
The IFIs also hold considerable influence over governments in terms of the paradigms that they
present to policy makers. For example, the World Bank supported a number of learning visits
for Iraqi government officials to other countries with poor relief schemes, with the intention of
persuading them to change the design of the Iraq Social Safety Net from one that targeted
demographic categories of the population living on low incomes, to one which identifies
households living in extreme poverty using a proxy means test (PMT), a form of poverty
targeting which is explained further in Section 3.2.
25
When promoting structural adjustment measures – especially subsidy reform – the IMF and
World Bank generally advise that part of the savings should be re-allocated to “well-targeted”,
“pro-poor”, “efficient” social security schemes. For example, in 2021, the IMF stated that poverty
targeting Iraq’s Public Distribution System Food Subsidy Programme “would provide the fiscal
space to further increase targeted assistance to the most vulnerable.”
26
However, the social security
schemes that are developed in the aftermath are generally much smaller than the subsidy
programmes that they are designed to replace. Indeed, Alston (2018), writing as the Special
Rapporteur on Extreme Poverty, states: “many subsidy reforms lead to significant net reductions in
social protection spending.” Consequently, the savings made in structural adjustment
25
Alkhoja et al. (2016). According to Alkhoja, the categories were orphans, married students, students that are orphans, those with
disabilities caused by ageing, those with disabilities caused by illness, the blind, the paralyzed, families of the imprisoned and
missing persons and the unemployed (e.g., due to terrorism and the internally displaced).
26
IMF (2021).
3 The World Bank and IMF’s Approach to Social Security
9
programmes are never fully diverted towards tax-financed social security schemes and other
social programmes.
The IFIs also aim to replace or redesign existing social security schemes. Existing tax-financed
schemes in the MENA region often identify people based on whether they are in a vulnerable
category of the population (for example, older persons, widows, families of prisoners) and
whether or not they have “any other means of support”. The latter was/is often defined
according to familial relations and whether someone would be deemed responsible for the
vulnerable person. These schemes are tweaked or replaced to better align with the social
security package that the IFIs promote.
Terminology is important, and the IFIs generally refer to their schemes as “social safety nets” or
“social assistance”, sometimes with the indication that lifecycle schemes are a different type of
social security to that proposed by the IFIs. This paper instead uses the term “social security”
both to refer to poor relief schemes as well as lifecycle programmes. This exemplifies the
difference between a poor relief paradigm and an inclusive lifecycle one. The former aims to
provide income security only to the most vulnerable, by catching them with a safety net,
whereas the latter adopts a human rights based approach, in which all persons – regardless of
their welfare level – are entitled to social security as a basic human right.
This section provides an overview of the components of the IFIs’ social security package. As is
demonstrated below, the package is neither as “pro-poor” nor “well-targeted” as they claim.
3.1 Low coverage
The schemes that the IFIs promote have small budgets, with low coverage. This means that
much of the “missing middle”, many of whom are living on low incomes, continue to lack access
to social security. For example:
• In a context of fuel subsidy reform, the World Bank is supporting the Government of
Tunisia to establish a new scheme called the Amen Social Programme which will
replace the Programme Nationale d’Aide aux Familles Necessiteuses (PNAFN). The
Permanent Cash Transfer (PCT) component of the scheme aims to increase coverage
from 8 to 10 per cent of the population. However, the poverty rate in Tunisia has
recently increased from 15 per cent to over 20 percent (and, it should be emphasised,
more than 20 per cent of the population are living on very low incomes). Further, an
additional 21 per cent of the population are identified as vulnerable and receive a
health card.
27
The entire “missing middle” would continue to be excluded, despite
experiencing significant shortfalls resulting from the fuel subsidy reform.
27
World Bank (2021b). See also Ben Braham et al. (Forthcoming) for a detailed discussion of Tunisia’s social security system.
3 The World Bank and IMF’s Approach to Social Security
10
• Under the World Bank’s “Jordan Emergency Cash Transfer COVID-19 Response Project”,
the IFI attached a Performance Based Condition to the loan, stipulating that by 2021,
85,000 eligible – i.e. “poor” – households would be enrolled in the Takaful Cash
Transfer Programme and would have been paid regular Takaful cash transfers (Takaful-
1). This amounts to between 4 and 6 per cent of the population.
28
UNESCWA (2021) has
noted that 270,000 households originally applied for Takaful, and around 108,000 were
found to be eligible. A further component, Takaful-3, is providing 160,000 households
with informal economy workers a cash transfer for a year, as part of the country’s
COVID-19 response. Again, these programmes exclude the missing middle.
• In Lebanon, under the World Bank’s “Lebanon Emergency Crisis and COVID-19
Response Social Safety Net Project”, an estimated 147,000 households – or only 12 per
cent of the population – will access the National Poverty Targeting Programme (NPTP)
and be paid cash transfers for one year.
29
However, in 2020, the World Bank
acknowledged that Lebanon’s current economic and financial crisis “could put more than
155,000 households under the extreme poverty line, but 356,000 households under the
upper poverty line.”
30
Even though poor relief schemes are too small to reach the majority of persons living on low
incomes, this issue is generally swept to one side by the IFIs. For example, the IMF has noted
that: “well-designed cash transfer systems in MENA can typically result in about 50–75 percent of
spending reaching the bottom 40 percent of the population, compared with 20 percent of the
amount spent to subsidize fuel prices and 35 percent to subsidize food prices.”
31
However, this fails
to recognise that more than the bottom 40 per cent of the population are vulnerable and
impacted by austerity measures, macroeconomic shocks and other lifecycle risks and
vulnerabilities. Further, as is discussed in Section 3.2, it also does not acknowledge that it is
impossible to accurately identify the poorest 40 per cent.
28
Based on a population estimate of 11 million, and an average household size of 4.8. Disparity in the figure given is due to
different average household sizes. The national average household size is 4.8, but according to the latest Household Expenditure
and Income Survey, the average individual in the poorest decile lives in a household of 7.7 persons. See also Anderson & Pop
(2022) for a detailed discussion of Jordan’s social security system.
29
World Bank (2021a). Prior to this, the NPTP paid in-kind benefits and fee waivers etc. The income transfer element is new. See
also Aboushady & Silva-Leander (Forthcoming) for a detailed discussion of Lebanon’s social security system.
30
World Bank (2020f).
31
Sdralevich et al. (2014).
3 The World Bank and IMF’s Approach to Social Security
11
Box 4: A case study of Egypt's Takaful and Karama Programme
Egypt’s Takaful and Karama Programme (TKP) was established in 2015 with support from the IMF and World Bank
and aimed to compensate those living in “extreme poverty” for austerity measures such as fuel subsidy reform.
However, Breisinger et al. (2018) found that the scheme was reaching only 20 per cent of the poorest quintile and
10 per cent of the second poorest quintile. This low coverage was especially notable, given that the World Bank
has found that 60 per cent of the population are poor and vulnerable.
32
Under the ‘Egypt Strengthening Social Safety Net” project, the World Bank is now supporting the government to
dissolve the Daman Social Pension and shift eligible beneficiaries over to TKP. The Daman social pension is a
means-tested unconditional monthly benefit paid to poor individuals and households, especially widows/divorced
persons, children with disabilities, orphans, and people younger than retirement age and unable to work due to a
disability. A Performance Based Condition stipulates that the government must “reassess beneficiaries of Daman for
the TKP using a [proxy means test]”. It is expected that many beneficiaries will not meet the requirements of the
TKP and will, therefore, no longer receive social security. As of September 2021, it was announced that TKP
would reach 3.9 million households, which amounts to around 15 million individuals (around 15 per cent of the
national population).
33
Coverage is, therefore, not broad enough to support the high number of people in need of
income security.
The IMF highlighted in its 2017 Article IV Consultation on Egypt that food subsidies had compensated for losses
brought about by fuel subsidy reform for the bottom 40 per cent, and half of the losses for the third and fourth
quintiles. This was attributed to the near universal design of the food subsidies. However, the IMF emphasised
that the food subsidy programme was “poorly targeted and inefficient” and that “improving targeting could free up
resources and reduce poverty among the low and middle income groups.”
34
Therefore, a scheme that is reaching the
majority of households living on low and middle incomes is described as being “poorly targeted”. Indeed, the IMF
also argued that TKP, in combination with other measures, “likely” fully compensated the effects of the reforms
for beneficiaries. The report failed to acknowledge that the majority of the population were not beneficiaries of
TKP and, therefore, the scheme could not have been effective.
An inclusive lifecycle scheme will always reach more persons living on low incomes than a
poor relief scheme due to its higher coverage. For example, Györi and Soares (2018) and Ben
Braham et al. (Forthcoming) have found that the introduction of a universal child benefit in
Tunisia would be much more effective at compensating a larger number of households that
have lost out on subsidies than the poverty-targeted schemes that were in place at the time.
Despite this, the IFIs’ messaging can confuse policy makers into thinking that poor relief
schemes are more “pro-poor”.
One example of how the IFIs use smoke and mirrors to give the impression that small poor
relief schemes are more effective at reaching the poor than universal schemes can be found in
Tunisia. As part of the broader Amen Social Programme, the Amen Social Family Allowance will
32
World Bank (2019c).
33
Zayed (2021).
34
IMF (2018a).
3 The World Bank and IMF’s Approach to Social Security
12
provide cash transfers to 120,000 children aged 0-5 years registered on the social registry
(around 10 per cent of that age group).
35
In a Project Appraisal Document, the World Bank
states that “simulations show that the share of beneficiaries of a family allowance programme in the
first decile should be about 30 per cent, and larger than any other subsidy program” and provides
the following information:
Table 1: Incidence of Different Social Protection Interventions in Tunisia
D1
D2
D3
D4
D5
D6
D7
D8
D9
D10
Energy Subsidies
6.1
7.4
8.0
8.6
9.2
9.7
10.3
11.5
12.8
16.4
Food Subsidies
8.7
9.6
9.7
10
10.2
10.3
10.4
10.5
10.5
10.0
Children 0—5 years whose
parents are not enrolled on a
contributory programme
29.6
17.3
13.6
11.6
8.6
6.4
5.5
3.8
2.5
1.4
Source: Based on World Bank (2021b).
The table is misleading, for two reasons. Firstly, the table is not actually showing the
distribution of Family Allowance beneficiaries, as claimed in the Project Appraisal Document
claims; rather, it shows the beneficiaries of a very different type of potential scheme in Tunisia.
This alternative programme is a child benefit that would be given to children aged 0-5 years
whose parents are not receiving a family benefit from the social insurance system (referred to
as a benefit-tested child benefit). In effect, therefore, the World Bank provides no evidence on
the Amen Social Family Allowance, despite claiming that it would be well-targeted. Instead it
uses simulated data for a much larger, but different type of programme, as a proxy for the
Family Allowance in its attempt to demonstrate that the Family Allowance is well-targeted. Yet,
the Family Allowance only covers 120,000 children, whereas the benefit-tested child benefit
cited in the Project Appraisal Document would have reached around 383,000 children in
2022.
36
The World Bank also confuses the reader by using “benefit incidence” to measure the
effectiveness of targeting. This methodology is commonly used by the World Bank as it almost
always gives the impression that means-tested programmes are “better targeted” than universal
schemes. The methodology examines the distribution of all recipients of a scheme across the
welfare profile of the population. Using this measure makes the benefit-tested child benefit
look much better than the universal food subsidy. In fact, it makes the food subsidy appear
regressive while the benefit-tested child benefit seems, to the uncritical eye, to be more “pro-
poor”.
However, if the schemes were assessed using a more appropriate measure that examines their
effectiveness in achieving the aim of reaching the poorest members of society, the universal
35
UNDESA population estimates for 2022.
36
CRES & UNICEF (2019).
3 The World Bank and IMF’s Approach to Social Security
13
food subsidy is much more effective. It would reach many more families in the poorest deciles
than the simulated benefit-tested child benefit (and many more than the World Bank-supported
Amen Social Family Allowance). In addition, the food subsidy would also reach struggling
families on middle – but still low and insecure – incomes. In effect, therefore, by reaching
many more families living in poverty, the food subsidy would be much more “pro-poor” than
both the Amen Social Family Allowance and a “benefit-tested” child benefit for those children
whose parents are not enrolled on a contributory programme, which is the type of programme
simulated in the study they cite. The Family Allowance promoted by the World Bank would
cover only 120,000 children, whereas the latter would cover around 383,000 children in 2022.
37
Consequently, the impacts of the Family Allowance would be much smaller than indicated.
The same point is illustrated in Figure 1, which compares the potential targeting effectiveness
of a benefit-tested child benefit with a universal child benefit (the type of scheme that the
World Bank conventionally opposes). The lines – which use the scale on the right – show
“targeting effectiveness” when employing the World Bank’s preferred benefit incidence
methodology. The benefit-tested child benefit – used by the World Bank as a proxy for the
Family Allowance – appears much better targeted than the universal child benefit. But, when
using the alternative – and more appropriate – measure of the schemes’ effectiveness in
reaching children in the poorest deciles, the universal benefit appears much more effective. As
the bars – which use the left-hand scale – in Figure 1 show, many more children in the poorest
deciles would be reached by the universal child benefit, making its targeting far superior to the
benefit-tested scheme. For example, while the benefit-tested child benefit would reach only
113,000 children in the poorest decile, this number would be far surpassed by a universal child
benefit, which would reach 172,000 children. Given that the benefit-tested child benefit is only
a proxy for the much smaller Amen Social Family Allowance, the universal child benefit would
be even more effective in reaching the poorest children than the Family Allowance, which
would reach only 120,000 children in total.
In effect, therefore, the World Bank’s presentation of the data on targeting effectiveness is a
classic example of how a magician uses smokes and mirrors to confuse its audience.
37
CRES & UNICEF (2019).
3 The World Bank and IMF’s Approach to Social Security
14
Figure 1: Incidence versus Absolute Numbers for beneficiaries of child benefits in Tunisia
(2022).
Source: Estimates for the universal child benefit are based on the National Survey on Household Budget, Consumption and
Standard of Living and population projections for 2022 from the UNDESA World Population Prospects 2019 revision. Estimates for
the programme cited by the World Bank in its Project Appraisal Document (for the benefit-tested child benefit) children whose
parents are not enrolled on the contributory programme) are taken from CRES & UNICEF (2019).
Meanwhile, in Morocco, the World Bank argued that the government’s planned universal child
benefit is “likely to be progressive” but contrasted it with a poverty-targeted scheme with 40 per
cent coverage, which the Bank says would be “even more progressive.”
38
The use of the word
“progressive” is misleading, as it could push policy makers towards thinking that the scheme
with low coverage is more likely to reach people living on low incomes, when, in fact, the
opposite is true, due to the likely very high targeting errors, which would result from the
poverty-targeted option.
39
38
World Bank (2020c).
39
Kidd and Athias (2020).
0
5
10
15
20
25
30
35
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
1 2 3 4 5 6 7 8 9 10
Distribution of children covered
Absolute number of children
Welfare deciles
Number of children 0-5 covered by the (benefit-tested) programme cited by the World Bank
Number of children 0-5 covered by a universal child benefit
Distribution of children 0-5 covered by the (benefit-tested) programme cited by the World Bank
Distribution of children 0-5 covered by a universal child benefit
3 The World Bank and IMF’s Approach to Social Security
15
3.2 Poverty targeting
In order to implement a scheme with low coverage, the IFIs use poverty targeting as a means of
identifying the poorest members of the population. In the MENA region, a PMT has been
employed, for example, in Morocco, Algeria, Jordan, Egypt, the Kingdom of Saudi Arabia,
Palestine, Tunisia, Yemen and Lebanon.
40
A PMT utilises a household survey to develop a
number of proxies to statistically predict a household’s income. In order to promote its use, the
targeting mechanism may become a condition in the loan. In Egypt, for example, a
Disbursement Linked Indicator specifying that a PMT would be designed and used to identify
beneficiaries was incorporated into the “Egypt Strengthening Social Safety Net” Project.
41
In
addition, the following Project Development Objects were applied:
• 60 per cent of the programme’s beneficiaries are under the poverty line
• 20 per cent of poor households are covered by the programme.
The World Bank has promoted this method as a “scientific” mechanism,
42
which it describes as
efficient and accurate. However, in reality it is a highly inaccurate process, with selection often
being little more than random. This is exemplified through the analysis of exclusion errors,
which shows the proportion of intended recipients that are excluded from a scheme. For
example, Egypt’s TKP has been found to have an exclusion error of 55 per cent for the poorest
quintile and 75 per cent for the second quintile.
43
In addition, in a global review conducted by
Development Pathways, it was found that utilising a PMT results in exclusion errors ranging
from 46 per cent to 96 per cent.
44
Poverty targeting is inaccurate for a number of reasons. Firstly, when the majority of persons
are living on low incomes, it can be difficult to differentiate among them. This is especially the
case when household composition, income and consumption levels fluctuate over a short
period of time. Consequently, a household may belong to the poorest group of the population
at the beginning of the year, but could have moved out of it by the end. The situation is only
heightened in countries experiencing financial crises, war, conflict and other shocks, as many in
the MENA region are. As Kidd et al. (2017) explain: “Many of those households that may have
been ‘correctly targeted’ in the first year are likely to be ‘inclusion errors’ in future years, as a result
of improved circumstances. However, anyone falling into poverty between surveys – perhaps due to
a crisis such as unemployment or the death of a breadwinner – is excluded from accessing social
security, until the time comes to be reassessed.”
40
World Bank (2020f).
41
World Bank (2015a).
42
World Bank (2020f).
43
Breisinger et al. (2018).
44
Kidd & Athias (2020). For schemes targeting the poorest 25 per cent of their intended category or less.
3 The World Bank and IMF’s Approach to Social Security
16
Second, for a PMT to be accurate, it must utilise up-to-date data. This means that it is essential
that a country is not only in a situation in which it can update its household surveys, but that it
has sufficient human resources to keep the data current. The IFIs are aware of this limitation:
the World Bank has stated that “even accurate models will be undermined if PMT implementation
is poor; for example, if household registry data are incomplete or out of date, or an incorrect scoring
threshold is applied.”
45
Despite this, it continues to promote PMTs in countries where the
mechanism is wholly unsuitable. For example, in 2017, the IMF wrote that the long-term
success of the PMT in Iraq will “depend on local capacity to regularly assess and revise, as
necessary, the targeting criteria. It is also crucial to enlarge the network of social workers to improve
control over eligibility and uptake, as well as to ensure access and accommodate on-site visits and
assessments.”
46
However, Tull (2018) has noted that the PMT entailed a number of challenges
including putting together a cadre of social workers and undertaking case management in
liberated areas.
In Yemen, meanwhile, no improvements have been made to the PMT in a decade due to the
ongoing conflict. The World Bank notes that “under normal circumstances, the PMT would have
been revised based on a new households survey, existing beneficiaries recertified, and new
households added to the beneficiary list. However, the current conflict makes this option not feasible
from a technical and political perspective.” Nevertheless, it maintains that Social Welfare Fund
beneficiaries “are likely to remain among the poorest in the country.”
47
There is no means of
knowing whether this is actually accurate, and so the World Bank is making a potentially
incorrect claim about the effectiveness of the PMT. However, given that, in 2019, around 75 per
cent of the population was living on less than US$3.10 a day,
48
it is evident that the majority of
persons living on low incomes are not being reached due to the scheme’s low coverage.
The third reason why poverty targeting results in high exclusion errors is the fact that PMTs are
not an accurate indicator of wealth. For example, in many formulae, households are
automatically excluded if they own a car.
49
Consequently, a household may not qualify for the
scheme even if they own a vehicle that is broken or which they cannot afford to fix because
they have no household income. Global evidence also points to PMTs encouraging perverse
incentives, such as households falsifying their answers in order to be enrolled. Indeed, in an
evaluation Egypt’s TKP scheme, it was noted that, although the PMT formula was secret,
households could make educated guesses about what was included, and there was room for
wealthier households to under-report their assets.
50
45
World Bank (2018).
46
IMF (2017a).
47
World Bank (2020b).
48
Moyer et al. (2019).
49
United Nations Economic and Social Commission for Western Asia (2021).
50
United Nations Economic and Social Commission for Western Asia (2021).
3 The World Bank and IMF’s Approach to Social Security
17
Due to the inaccuracy of the PMT mechanism, the IFIs invest a lot of money trying to improve
the targeting formula. In Tunisia, for example, a Performance Based Condition stipulates that
the PMT formula used under the Amen Social Programme needs to be updated.
51
Meanwhile, in
Jordan, a Performance Based Condition attached to the “Emergency Cash Transfer Response
Project” loan requires the National Aid Fund (NAF) to develop “a revised Takaful targeting
methodology based on the findings of the evaluation study and [for it to be] approve[d] by its Board
of Directors.” Further, the NAF will provide “the Bank with the revised targeting formula that is
satisfactory to the Bank team based on the findings of the targeting evaluation. This will be
validated by the World Bank.”
52
In Iraq, the World Bank attempted to reformulate the PMT
formula to address issues of high displacement. In order to reduce inclusion errors, the IFI
suggested using community-based targeting alongside a PMT.
53
However, community-based
targeting is also a highly inaccurate targeting mechanism, and schemes that use this
mechanism, combined with a PMT, still have high exclusion errors. Kidd et al found that
Kenya’s Hunger Safety Net Programme, for example, which uses a combination of methods
including community-based targeting, has an exclusion error of 70 per cent.
54
Further, there is
no evidence that PMTs can be meaningfully improved, as errors are consistently high globally.
55
As discussed in Section 3.1, despite widespread evidence showing that poverty targeting is
inaccurate, the IFIs continue to use smoke and mirrors to mislead policy makers into thinking
that this is not the case. For example, the World Bank states, that out of the current 150,000
households who are on Lebanon’s National Poverty Targeting Programme (NPTP) database,
43,000 households have PMT scores corresponding to the extreme poverty threshold, which
“suggests a very good identification of potential beneficiaries, in line with the best performing social
assistance programs.” There is little acknowledgement, however, of how inaccurate PMTs can be
and that a well performing PMT is, objectively, performing very poorly.
56
Elsewhere in the
document, the World Bank does recognise that an assessment of targeting performance is not
currently possible due to “the small scale of targeted safety net coverage and the absence of recent
nationally representative household survey data.”
57
It is, therefore, difficult to understand how the
World Bank can know that there has been “a very good identification of potential beneficiaries.”
Indeed, the PMT formula is based on a household survey that was carried out in 2011. It is
therefore completely inaccurate and not remotely reflective of Lebanon’s current financial
situation.
51
World Bank (2021b).
52
World Bank (2020e).
53
World Bank (2018).
54
Kidd & Athias (2020).
55
Kidd & Athias (2020).
56
Aside from a note that smaller families may not be identified “because of the household characteristics used by the targeting
mechanism to calculate household poverty”, that some regions are under-represented in the database, and that other families may
miss out due to access barriers.
57
World Bank (2020d).
3 The World Bank and IMF’s Approach to Social Security
18
When assessing the impacts of a poverty-targeted programme, the World Bank and IMF often
do not account for the exclusion errors that are a result of the design of the targeting
mechanism. Consequently, the institutions undertake simulations that assume that a
programme will be perfectly designed and implemented, with zero exclusion errors, an entirely
unrealistic assumption. The results, therefore, exaggerate the effectiveness of a scheme.
58
For
example:
• In Tunisia, studies by the World Bank which look at the costs and impacts of replacing
universal subsidies with poverty-targeted social security programmes do not consider
the high costs of targeting, or exclusion errors.
59
In fact, the World Bank has stated that
a universal compensation measure would not bring “substantive poverty reductions” but
that “perfect and costless targeting would slash poverty incidence down to 5 percentage
points.”
60
• In Lebanon, the World Bank has stated that the Emergency Social Safety Net (ESSN)
scale-up, “if perfectly targeted… will result in a reduction in the poverty gap from 13.9 to
9.2 percent, and the extreme poverty gap from 5.6 percent to 3.6 percent.”
61
• In Iraq, the IMF noted that it “welcomed the authorities’ plan to boost the allocation for
cash transfers in the 2021 budget, which would allow expanded coverage to all eligible
households—amounting to over 20 percent of population—and raise the amount of
assistance to shield the vulnerable from the expected increase in inflation.”
62
Given the
exclusion errors associated with poverty targeting, the scheme clearly would not reach
all eligible households and would likely exclude more than half.
3.3 Social registries
Linked to the implementation of a PMT is the development of a social registry. A social registry
is a database that includes household data, with the aim of selecting households for poverty-
targeted programmes.
63
The World Bank has supported the implementation of social registries
in countries such as Yemen, Egypt, Morocco, Tunisia, Iraq, Palestine, and Lebanon, noting that
the social registry “allows for better targeting, thus making social transfers more pro-poor.”
64
However, as social registries are a tool for implementing poverty targeting, they carry the same
design flaws discussed in Section 3.2. They therefore fail to accurately identify the poor.
58
Kidd (2018a).
59
Györi & Soares (2018); World Bank (2013, 2015b).
60
Cuesta et al. (2015).
61
World Bank (2021a).
62
IMF (2021).
63
Kidd, Athias, & Mohamud (2021).
64
World Bank (2017b).
3 The World Bank and IMF’s Approach to Social Security
19
Indeed, Kidd, Athias, and Mohamud (2021) note that social registry databases use “out-of-date
information to assess household wellbeing even though circumstances within the household change
rapidly, often substantially: in some cases, the information may be ten years old. It is no wonder,
therefore, that there are significant errors in the accuracy of social registries, resulting in very limited
effectiveness.” In Lebanon and Yemen, for example, the social registries hold data from
household surveys that were carried out in 2011. Coverage of the country’s population is also
low in these databases. In the same paper, the authors found that out of 52 countries, 43 held
data on less than 50 per cent of the population and 26 on less than 20 per cent. In Yemen,
coverage is 30 per cent. This limits the effectiveness of a social registry, as it is likely that there
are households living on low incomes that are not included in the database.
Ultimately, the social registry is a product that is financed through loans, which the IFIs are
trying to sell to governments. The IFIs therefore oversell the databases’ efficacy. For example,
in Palestine, the World Bank states that the social registry will “benefit 150,000 of poor and
vulnerable households through increased access to social protection programs.” This is roughly 15
per cent of the population.
65
However, these are only “potential beneficiaries” who may, or may
not, access the poverty-targeted programme at a later date. Indeed, the same paper notes that
“in this new system, cash would become an instrument of last resort for those who need it the most
(the extreme poor)”.
66
In many cases, the World Bank aims to make the social registry a gateway to coordinate
countries’ social programmes. In Palestine, for example, the social registry is noted as a means
of “improv[ing] the coordination, coverage and targeting of social development programs”
67
and in
Lebanon, it is a “a powerful platform to coordinate social policy.”
68
In Morocco, the World Bank
even stipulates, in a disbursement linked indicator, that the government will implement a law
“setting forth that the [social registry] is the entry point for the [Medical Assistance Plan], DAAM and
Tayssir programs and for any new safety net programs to be introduced by the Borrower.”
69
However, a social registry is simply a targeting database, and does little beyond this to
coordinate different schemes.
The development of social registries – especially when they form a condition of the loan – can
therefore stymie government’s efforts to develop inclusive lifecycle schemes. Social registries
are not designed to identify recipients for modern, lifecycle social security systems, based on
individual entitlements, as they do not hold information on the majority of the population and
nor do they hold information on individual incomes. By presenting social registries as the
coordinating mechanism for social security schemes, this pre-supposes that social programmes
65
World Bank (2017a). Based on 2019 UNDESA population estimates, and an average household size of 5, according to Awad
(2022).
66
World Bank (2017a).
67
World Bank (2017a).
68
World Bank (2021a).
69
World Bank (2017b).
3 The World Bank and IMF’s Approach to Social Security
20
will be household based and poverty targeted. It is therefore a means of ensuring that countries
continue to implement small, poor relief schemes. As discussed elsewhere in this paper,
Morocco is currently designing a universal child benefit. Depending on the operational
definition of “safety net programmes” it could potentially put the universal child benefit in
legal jeopardy as it would not need to utilise the social registry.
If the World Bank wants to help countries strengthen their delivery systems and develop useful
databases, they could do so by diverting money towards developing a Single Registry, or a civil
registry, instead. A Single Registry is a warehouse that collects information for all types of
social security programmes, providing interlinkages between different programmes’
management information systems as well as external databases such as civil registries (which
would hold information on the entire population).
70
Single Registries are an important element
of developing a modern lifecycle based social security system, whereas social registries aim to
cement the usage of small, poverty-targeted schemes.
3.4 Household benefits
A frequent component of the IFIs’ social security package is that benefits are delivered to
households, rather than to individuals. This contrasts with an inclusive lifecycle based system,
in which individuals are regarded as rights-holders who are entitled to social security. As such,
household benefits are not consistent with a rights-based approach to social security. In
addition, delivering benefits to households rather than individuals can limit the effectiveness of
a scheme.
Firstly, household transfers do not necessarily benefit all members of the household. For
example, they fail to take into account the intra-household distribution of resources and the
fact that power dynamics may mean that more vulnerable members of the household could be
excluded from the transfer. Unless the head of the household is, for example, an older person
or a person with a disability, a programme cannot guarantee that the vulnerable person will
receive part of the benefit or that they will have purchases made on their behalf. This is
especially the case in households in which the vulnerable person experiences social exclusion.
Another limitation of household benefits is the fact that many people with no incomes are
excluded, because their household is assessed as non-poor. While a household may not qualify
for a poverty-targeted programme, this does not mean that an individual within the household,
such as an older person, should not be entitled to an individual benefit. For example, the
individual may have no income themselves and be completely dependent on family members.
Indeed, household benefits deny individuals the protection they are entitled to on an individual
level. For example, most persons with disabilities experience additional costs of disability, such
70
Chirchir & Farooq (2016); Kidd, Athias, & Mohamud (2021).
3 The World Bank and IMF’s Approach to Social Security
21
as higher travel costs, higher education costs, as well as reduced earnings and income. These
additional costs mean that, even when two households have the same income level, the
household that has a member with a disability has a lower standard of living, because more
funds must be spent on the additional costs of disability to access services and participate in
society. Regardless of whether a person with a disability is living in a household that is
classified as poor or not, they are entitled, as an individual, to participate on an equal playing
field with their non-disabled peers. This means that it is essential that they are compensated
for the additional costs of disability through a disability benefit.
71
While some poverty-targeting mechanisms – such as those used for Lebanon’s National Poverty
Targeted Programme (NPTP)
72
and Yemen’s Social Welfare Fund (SWF)
73
– target the cash
transfer at specific categories of households, including households with a vulnerable individual,
this does not address the issues explained above.
74
Unless the vulnerable individual is a direct
recipient of the cash, as is the case with the Karama component of Egypt’s cash transfer, there
is no guarantee that they will benefit from the scheme. Likewise, many vulnerable individuals
are not receiving income security because their household does not qualify for the programme.
For example, Yemen’s SWF has specified that applicants must meet the following conditions:
either “(i) the individual or his/her family has no source of income (either from property, business or
work) that might compensate for the lack of government assistance; and (ii) the individual or his/her
family has no relative legally obliged to support him/her financially.”
75
Meanwhile, Egypt’s Karama
programme is targeted towards older persons and persons with disabilities but only those
whose households are assessed as living in poverty (see Box 4).
Jordan’s Takaful provides a poignant example of the risks of implementing a household benefit
and how it can undermine gender equality. UNICEF (2020) notes that enrolment on government
databases is based on the head of the household who is the husband unless a woman is
divorced or a widow. Consequently, only the head of the household may apply to the
programme, which, UNICEF notes “might cause exclusion of females, within the household, who
wish to apply to the program but the male head of the household does not want to. This structural
challenge should be discussed and handled at a national level; outside of the scope of this project.
However, women are given the opportunity to submit grievances in such cases which could be
investigated and handled on case by case.” A social security system based on individual
entitlements, or one which provides a universal lifecycle benefit, is not subject to such risks or
71
Kidd et al. (2019).
72
World Bank (2021a.) In Lebanon, eligible households must satisfy two conditions: (a) their verified PMT scores will be below the
eligibility cut-off corresponding to the extreme poverty line; and (b) they will belong to pre-determined socially vulnerable
categories – including households with members with a disability, households with any elderly members, households with any
children (ages 0-17) and female-headed households.
73
IPC-IG & UNICEF (2014). In Yemen, applicants may belong to a social category or an economic category.
74
Some PMT formulas may give extra weighting to vulnerable individuals but the exact PMT formulas in the MENA region are not
known.
75
IPC-IG & UNICEF (2014).
3 The World Bank and IMF’s Approach to Social Security
22
limitations because women – if they are eligible for the scheme – are entitled to the benefit as
an individual.
3.5 Conditions, sanctions and workfare
The programmes that are favoured by the World Bank and IMF are often ones in which
recipients are required to perform a certain behaviour in order to receive their benefit. Schemes
can take the form of a conditional cash transfer (CCT) or a workfare programme. Under a CCT,
beneficiaries are required to meet conditions such as immunisation, clinical visits, and regular
school attendance and, if they do not, they are sanctioned by the loss of the transfer; while, in a
workfare scheme, poor households are given transfers as long as they engage in labour, usually
through hard labour on public works. In the MENA region, the World Bank has promoted labour
intensive works in, for example Yemen
76
and Iraq,
77
noting that unlike cash transfers, “labor-
intensive works target the working poor and help build valuable assets for the communities.”
78
Imposing conditions and sanctions aligns with a poverty narrative in which the “undeserving
poor” – i.e. those with labour capacity – are required to work, or demonstrate a certain
behaviour in order to achieve assistance. This viewpoint holds that they are not necessarily
poor due to structural limitations, such as a lack of jobs, lifecycle risks, or discrimination, but
rather, due to their own fault (e.g. by not becoming educated or not working hard). Under
Egypt’s TKP, for example, CCTs are offered to young families under the Takaful component,
whereas unconditional transfers – under the Karama component – are offered to vulnerable
categories of people, such as older people or persons with disabilities.
79
Here, the “deserving”
are the vulnerable populations who do not need to change their behaviour, because they are
seen to be poor due to lacking labour capacity, while households with children must prove their
deservingness by attending four health check-ups a year for children younger than 6 and
ensuring that children aged 6-18 years attend school at least 80 per cent of the time, or risk
being sanctioned by losing benefits. In Tunisia, meanwhile, the World Bank is supporting the
government to implement the “Family Allowance” aimed at households with children aged 0-5
years who are enrolled on the poverty-targeted Amen Social Programme. An assessment will be
carried out, with the aim of making “recommendations for strengthening the family allowance sub-
program, including through the development of accompanying measures aimed at fostering
behavioral changes in parenting practices.”
80
Finally, a Performance Based Condition in the World
Bank’s “COVID-19 Social Protection Emergency Response Project” “supports the [Government of
Morocco’s] effort to monitor access to school and attendance of beneficiaries and the delivery of cash
76
World Bank (2020b).
77
World Bank (2018).
78
World Bank (2020b).
79
UNICEF (2019a).
80
World Bank (2021b).
3 The World Bank and IMF’s Approach to Social Security
23
transfers to improve the implementation of Tayssir, but also to draw key lessons to benefit existing
and future cash transfer programs.”
81
The implementation of conditions is problematic as it requires equal performance despite
unequal contexts and circumstances. Sanctioning recipients is not compliant with a human
rights-based approach to social security, since States have an obligation to immediately meet
minimum essential levels of social security. These rights should not be conditional on the
performance of certain actions as it is an inherent entitlement.
82
A child, for example, should
not miss out on a benefit because their mother is working two jobs to feed her family and is
unable to take them to a health appointment at the designated time.
Indeed, imposing conditions is not suitable for countries in the MENA region that have limited
services or administrative capacity, or are experiencing conflict. Kassem (2021) explains that
Egypt’s TKP failed to fully implement conditionalities as they were difficult to monitor and
enforce. As a result, four intermediate results indicators were dropped from the World Bank’s
“Strengthening Social Safety Net” project.
83
A major limitation was the lack of available
services: in many cases, health facilities were not open or lacked basic facilities such as
weighing scales.
84
A Disbursement Linked Indicator attached to the loan even made
disbursement conditional on the government implementing a Management Information System
(MIS) module that “will track compliance with health and education co-responsibility (conditions) in
the Takaful program.“ However, for the MIS module to function properly, there still needs to be
adequate human resources, IT capabilities and services on the ground. In Yemen, meanwhile,
the CCT component of the World Bank’s “Basic Education Development Programme” made the
receipt of a cash transfer conditional on school attendance and performance. A World Bank
implementation status and results report from 2016 shows, however, that no progress was
made in this indicator.
85
It is likely that meeting these indicators was near impossible given that
Yemen was in a state of conflict.
While the World Bank has claimed that there is significant evidence that CCTs have had
positive impacts worldwide, evidence is weak and ambiguous about the operative role of
conditions (rather than just cash) in achieving results, and in some cases indicates a negative
relationship.
86
For example, the low value of the Pantawid CCT in the Philippines led to
increased levels of child labour among beneficiary households as families needed higher
incomes to cover school costs so as to avoid being forced to exit the programme.
87
In a study
81
World Bank (2020c).
82
Sepúlveda & Nyst (2012).
83
World Bank (2019b). These were: Share of households with children aged 6–12 years who have newly enrolled children
(excluding in grade 1); Share of households with children in grades 1–12, reported to have female drop-out decrease; Health clinic
utilization rate increased in Takaful program areas; and share of mothers reported to have improved knowledge on health issues.
84
Kassem (2021).
85
World Bank (2016).
86
See, for example: Kidd & Calder (2012).
87
Kidd (2018a).
3 The World Bank and IMF’s Approach to Social Security
24
conducted by Benhassine et al (2015), looking at whether the Tayssir CCT programme in
Morocco would be effective, it was found that applying conditions has a negative impact on
programme performance, whilst at the same time increasing both cost and complexity. In this
case, children were more likely to attend school when receiving an unconditional transfer than
a CCT that was conditional on school attendance and enrolment. The authors posited that this
may be because “the conditionality on attendance may be discouraging: someone who feels like
they will not manage to have less than four absences a month may either not enrol or give up under
a CCT, but continue under the [labelled unconditional transfer].” Indeed, it is often the most
vulnerable households that face the largest barriers to complying with conditions.
Workfare schemes can also have negative impacts, as there are significant opportunity costs
associated with participation. In Ethiopia, for example, the Productive Safety Net Programme,
which is partially financed by the World Bank, was found to be associated with a reduction in
per capita household consumption by USD 1.86 per month.
88
In Rwanda, meanwhile, the World
Bank (2019a) found that between 2014 and 2017, although the poverty rate decreased for
households receiving unconditional transfers, it increased from 69 per cent to 81 per cent for
households engaged in the workfare component. Households on direct support received the
benefit with no conditions attached.
Again, despite evidence pointing to the fact that imposing sanctions has negative impacts, the
IFIs utilise misleading language to persuade practitioners to impose conditions. This is
probably because it is important for the IFIs to demonstrate that CCTs and workfare
programmes are productive programmes and, therefore, can be financed from loans. For
example, it should be borne in mind that the study conducted on Morocco’s Tayssir programme,
which was mentioned above, was partly funded by the World Bank, and the lead author works
for the organisation. Despite the fact that the study found that imposing conditions in the
Tayssir scheme was less effective than an unconditional cash transfer, a CCT – requiring the
attendance and enrolment of children in school – is what is currently in place. This is likely
due, in part, to the results of the study being muddied, because while the unconditional cash
transfer [UCT] was shown to be more effective in an early version of the paper, it was
subsequently changed and the unconditional transfer was rebranded as a “labelled cash
transfer” [LCT], with the justification that it carried an implicit message about attending school
and that this may have encouraged the higher attendance. According to Freeland (2013), the
report “suggests that this makes an LCT different from a UCT, and implies that an LCT lies
somewhere midway along the spectrum between a UCT and a CCT.” Consequently, even though
the LCT was unconditional, it was presented as a scheme that nudged recipients into attending
school, in effect providing a justification for implementing a benefit with a condition attached.
88
Tafere and Woldehanna (2012).
3 The World Bank and IMF’s Approach to Social Security
25
3.6 Undermining more universal schemes
When countries aim to introduce more inclusive lifecycle schemes, the IFIs sometimes act to
undermine them (as, for example, they did in Mongolia
89
). Morocco, for example, was the only
country in the MENA region to spend more than 2 per cent of GDP on a minimally adequate
stimulus to address the impacts of the COVID-19 pandemic.
90
The response was so popular and
effective that the country has announced that it will increase its old age pension coverage and
universalise the Family Allowance Programme, which is a child benefit. The Family Allowance
was previously only available through the contributory system, and its design is in conflict with
the Tayssir CCT, which is supported by the World Bank. As discussed above, Tayssir is a
household benefit conditional on children attending school. The two schemes exemplify the
different paradigms to supporting children.
While the World Bank has committed to supporting the implementation of the Family
Allowance, the language it uses does not wholeheartedly recognise the benefits of a universal
programme. For example, the World Bank notes that it will assist the government in the
implementation of the programme by contributing expertise on enabling the scheme to reach
vulnerable female-headed households and their children, rather than all children. It then states
that, “thus, the fact that this program focuses on the universalism of the Family Allowance, it will
also directly improve the coverage of women and their children”.
91
This is a strange statement to
make, suggesting that it was not already a consideration of the government when it announced
that it would universalise the scheme. Further, as noted above, the paper states that the
universal child benefit is “likely to be progressive” rather than recognising that a universal
benefit is, of course, one of the most progressive designs a scheme can have since those at
lower ends of the welfare distribution – all of whom benefit from the programme – experience
disproportionately greater real improvements in welfare. And, a universal child benefit would
be the only means of ensuring the inclusion of the poorest children.
Importantly, despite the Government of Morocco’s commitment towards increasing coverage of
the programme, the World Bank notes that the programme would cost 1 per cent of GDP and
suggests ways in which coverage could be reduced in order to save costs. The Bank suggests
either starting by covering a subset of the child population, or, “another alternative, even more
progressive, would be to attempt to reach the poorest in the first phase, for example, starting from
the families with children in the bottom 40 percent of the distribution.”
92
Therefore, the World Bank
appears to be continuing to encourage a poverty-targeted design, with the aim of lowering the
costs of the scheme, which would then require less taxes.
89
Kidd (2018b).
90
Sibun (2021).
91
World Bank (2020c).
92
World Bank (2020c).
3 The World Bank and IMF’s Approach to Social Security
26
Indeed, the IFIs often promote schemes with low budgets with the argument that countries do
not have the fiscal space to implement a universal lifecycle scheme. This can be observed in
Tunisia, in which a poverty-targeted Family Allowance, aimed at households with children aged
0-5 years, is being piloted. As an indicator of the political and financial power vested in IFIs and
their advocacy of a poor relief paradigm, the poverty-targeted design of the pilot appears have
been chosen over universal alternatives that performed much better in simulations of cost
effectiveness and cost efficiency. These alternatives were proposed in the preceding years
through a government Steering Committee that included UNICEF and the World Bank.
93
Instead,
the World Bank has lent its support to the narrowest and least effective of options. The World
Bank (2021b) notes that the full expansion of the scheme to all households enrolled in the
Amen Social programme will “cost about 0.03 percent of GDP, which is the less expensive scenario
of the government strategy to progressively implement a Protection social floor [sic]. This scenario
introduces a gradual expansion of the Family Allowance by starting with all children 0-5 years old in
poor and vulnerable households enrolled in the AMEN Social program. It is also worth noting that
the [Government of Tunisia] currently allocates more than two percent of GDP to subsidize energy
products. Unlike the energy subsidy, the simulation shows that the Family Allowance for all children
0-5 years old in households enrolled in the AMEN Social program is progressive.”
Tunisia’s planned Family Allowance – which will cost 0.03 per cent of GDP – is miniscule and
most definitely not progressive, especially when considering the proposed budget of Morocco’s
Family Allowance, which would be 1 per cent of GDP. Even in Tunisia, UNICEF estimated that a
fully realised universal child benefit for children aged 0-17, would have cost only 0.89 per cent
of GDP in 2018,
94
while Development Pathways estimates that a fully universal child benefit for
all children aged 0-5 years in Tunisia would only cost 0.36 per cent of GDP in the first year and
could gradually expand to all children aged 0-17 years at minimal additional cost per year.
95
The World Bank argues that Tunisia’s small scheme is the first step towards the government
progressively implementing a Social Protection Floor, and that it will support “progressive
universality” with the justification that there is insufficient fiscal space to implement a scheme
with higher coverage. In effect, even though the Government of Morocco is willing to develop a
minimum Social Protection Floor for all children in the country, and shows that it has the fiscal
space to fund the scheme, the World Bank is still opposed. In fact, UNICEF has estimated that
fiscal space would increase by an additional 2.5 percentage points of GDP as a result of the
gradual phasing out of energy subsidies, and a universal child benefit would require just 37 per
cent of this budget in 2023. Yet, the poor relief option was adopted.
96
93
Györi & Soares (2018; UNICEF (2019b). “This exercise found that “a UCB would be highly cost-effective. The cost of achieving a one
percentage point reduction of the child poverty headcount is less through the UCB than through the existing poverty-targeted social
assistance programme, the PNAFN …partly because the latter focuses on households headed by elderly persons and others without labour
capacity, who tend to have fewer children, but also due to serious inclusion and exclusion errors in the PNAFN’s poverty targeting”.
94
UNICEF (2019b).
95
Ben Braham et al.,(Forthcoming). See also the ISSPF Costing Tool, available online.
96
UNICEF (2019b).
3 The World Bank and IMF’s Approach to Social Security
27
As discussed in Section 5, it is hard to avoid the conclusion that, rather than supporting
governments to implement modern lifecycle systems, the World Bank is stymied by its neo-
liberal ideology and framework of reference and, therefore, encourages countries to implement
ineffective and regressive poor relief programmes even when there is the fiscal space and
demand for universal schemes.
In fact, as is further discussed in Section 4, inclusive lifecycle schemes attract higher
investment over time due to their popularity.
97
Therefore, the fiscal space is dynamically
generated from the design of the scheme. A more effective means of gradually expanding a
child benefit – rather than targeting it to the poorest households – is for countries to focus
initially on providing the benefit to all children belonging to a younger cohort. Then, coverage
can increase over time if the children – even as they grow older – are not exited from the
scheme. Options showing how this could be operationalised are displayed in Figure 2 below.
Similarly, if countries were to introduce a comprehensive old age pension, it is more
progressive to provide the benefit for all older persons within a specified higher age cohort –
for example, 80 years and above – and then lower the eligibility age over time.
98
Figure 2: Options for growing the age of eligibility to the child benefit, over time
Source: Adapted based on Kidd, Athias, and Tran (2021).
While the IFIs influence policy in line with their interests and ideology, when a government
follows its own approach, the IFIs can oppose it and withdraw funds. By embedding conditions
97
Kidd (2015).
98
Simulations of gradual rollout scenarios following these principles can be found in the ISSPF working papers on Lebanon, Jordan
and Tunisia. See Aboushady & Silva-Leander (Forthcoming); Anderson & Pop (2022); and Ben Braham et al. (Forthcoming).
3 The World Bank and IMF’s Approach to Social Security
28
into loans – such as requiring CCTs and poverty targeting to be implemented – the loans
themselves can be withdrawn and/or tranches postponed, with the argument that the
conditions have not been met. As is discussed further below, these conditions significantly
reduce the autonomy of governments to decide on the design of their social security schemes.
For example, in Lebanon, the caretaker government – recognising the urgent need during
COVID-19 to implement a scheme that has much broader coverage than their existing
programmes – announced, in 2021, that it had approved a ration card system that would
provide 500,000 poor households with funds for a year. It is understood that they aimed to
replace the subsidy system and that they wished to implement a different scheme to the NPTP
poor relief programme which the World Bank supports through the ESSN project. The
government suggested that the scheme could be funded by the IMF and the World Bank.
However, the World Bank responded that: “in the event that the government of Lebanon requests
the cancellation and redirecting of cancelled financing under the existing World Bank’s portfolio to
other priorities, the World Bank would consider reallocating the released funds as additional
financing to the Emergency Social Safety Net (ESSN) Project only, which is a poverty program
targeting extremely poor Lebanese households.”
99
3.7 The IFI approach in the MENA region can be found around the
world
The MENA region is not unique in how it is treated by the IFIs. Across other low and middle-
income countries, the IFIs consistently promote poor relief and undermine universal schemes.
According to Kidd (2018a), recent World Bank loans to Bangladesh and Pakistan stipulated that
the proportion of all beneficiaries in the poorest two quintiles must increase to 80 per cent,
thereby enforcing further poverty targeting. The IFIs have also lobbied strongly to reduce
coverage of universal lifecycle schemes. For example, the World Bank has recommended
targeting a range of universal old age pensions, including in Nepal, Thailand, Lesotho, Mauritius
and Namibia. Further, Kidd explains that in Mongolia, the IMF included a structural benchmark
on targeting the universal child benefit to the poorest 60 per cent of children. After the IMF and
World Bank threatened to withdraw their loans, the Government of Mongolia was forced to
comply although it negotiated a target of 80 per cent coverage, recognising that it would suffer
politically if it reduced the benefit to only 60 per cent coverage. Poverty targeting was
introduced in 2018.
99
Sabaghi (2021).
4 Consequences of the World Bank and IMF’s approach
29
4 Consequences of the World Bank and IMF’s
approach
The World Bank and IMF are consistently criticised for promoting austerity measures that
reduce the living standards of the populations impacted by their proposed measures.
100
Poor relief schemes are one such component as they are both a means of reducing fiscal
costs, as well as alleviating the impacts of other austerity measures. Some of the
consequences of poor relief schemes are explored below.
4.1 Minimal impacts on well-being and economic growth
Tax-financed social security systems are essential for reducing inequality, since they help
a State to redistribute wealth from the wealthier sectors of society to those living on low
and middle incomes. OECD (2012) note that: “Cash transfers – such as pensions,
unemployment and child benefits –account for more than three quarters of the overall
redistributive impact in the OECD on average and taxes for the remaining.”
101
However, in
order to achieve this, schemes must be inclusive, with high coverage and high transfer
levels. For example, in 2011, Iran introduced a universal cash transfer programme to
compensate for the elimination of fuel subsidies. This scheme proved to be very popular,
reducing the Gini coefficient by 2.75 points.
102
In addition, Mathai et al (2020) have found,
in the Middle East and Central Asia, that social spending matters “for both lowering poverty
and boosting the [inequality-adjusted Human Development Index] and that “public spending
on social protection has the largest, distinct, and most statistically significant impact on [the
Human Development Index] relative to either health or education spending. One possible
explanation for this result is that, perhaps, social protection schemes have the most immediate
effect on lifting people out of poverty, while health and education spending take more time to
bear fruit.”
Arresting soaring poverty rates and reducing inequality also have a significant impact on a
country’s economic growth. As argued in Tran et al (2021), and depicted in Figure 3
below, investment in inclusive social security generates economic growth by: building
human capital and increasing labour supply; mitigating shocks and production losses;
driving consumption and demand which stimulates economic activity; fostering social
100
See, for example, Human Rights Watch (2022).
101
OECD (2012).
102
IMF (2017b).
4 Consequences of the World Bank and IMF’s approach
30
cohesion; and reducing inequality. In effect, a virtuous circle of greater economic growth
and sustained investment in social security, is created.
Figure 3: Conceptual model of the pathways through which social security impacts on
economic growth
Source: Reproduced from Tran, et al. (2021).
Given that the majority of the population – the “missing middle” – do not benefit from
any type of social security scheme in the MENA region, the impacts shown above are
minimal, compared to what could be achieved with an inclusive lifecycle system. As
Figure 4 demonstrates, universal pension schemes in Asia are far more effective at
reducing inequality – as measured by the Gini coefficient – than small poverty-targeted
programmes. However, this argument is not always recognised by the IFIs: for example,
Brazil’s targeted Bolsa Familia CCT programme is often used as a model example of a
social security scheme, even though, as Kidd (2018a) explains, “it has targeting errors of
around 50 per cent and its impact on inequality is 20 times less than that of Brazil's inclusive
pension system.” The significant impacts of Brazil’s pension system are seldom, if ever,
mentioned by the IFIs, however.
4 Consequences of the World Bank and IMF’s approach
31
Figure 4: Comparison of the impacts on inequality resulting from a selection of tax-
financed pensions in Asia
Source: Kidd et al. (2022)
4.2 Shame, stigma and social tensions
A major consequence of poor relief schemes is that they can increase the shame and
stigma of recipients.
103
Due to the low coverage of the programmes, recipients are part of
a small minority within their communities, which can lead to them being “othered” and
regarded as different. Indeed, by being separated from their
peers, they are labelled as having failed, in some way, to
have achieved an adequate standard of living. Pereznieto
et al (2014) found, for example, that recipients of the
Palestinian National Cash Transfer Programme (PNCTP)
were sometimes reluctant to admit that they were enrolled on the programme due to
feeling embarrassment and shame.
Beneficiaries can be further dehumanised when they must comply with conditions in a
CCT so as to avoid being sanctioned. The arguments used to justify the conditions can be
judgmental, with the implication that the poor behave badly and must change their
behaviour if they are to deserve the money they are being given. For example, the World
Bank has noted that enforcing conditionalities for Egypt’s TKP programme will
103
See, for example: Barrantes (2020).
-0.6%
-14.6%
-0.3%
-8.2%
-2.8%
0.1%
-0.03%
-2.9%
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
Bangladesh
Georgia
India
Maldives
Nepal
Philippines
Sri Lanka
Thailand
Percentage change in Gini
Poverty-targeted tax-financed pension
Universal coverage by old age pensions
“I feel shy, some people mock
me when they know that we
receive the cash transfer”
(Pereznieto et al., 2014).
Pereznieto et al (2014)
4 Consequences of the World Bank and IMF’s approach
32
“encourage[e]” beneficiaries “to invest in educating their children”
104
and in Iraq, that it
would “incentivis[e] households to invest in education and health.”
105
The language thereby
suggests that the poor would not make wise decisions and opt to invest in their children
otherwise. As explained above, such arguments ignore the structural constraints in society
that can lead to poverty such as high unemployment or financial crises. Further, the
imposition of conditions can undermine beneficiaries’ dignity because they are not
treated as free and autonomous agents. It is notable that conditions are not implemented
in universal lifecycle benefits, for it would be considered offensive to require the middle-
class to comply with certain behaviours. However, because ‘the poor’ are more
disenfranchised, it is easier to implement programmes that undermine their dignity in this
way.
The dehumanisation of beneficiaries is exacerbated by how they are monitored. For
example, Egypt’s TKP established “co-responsibility” or “social accountability” committees
to conduct community monitoring in order to disqualify households that the committees
identified as having incorrectly qualified for the programme. One stakeholder recounted
to Kassem (2021) that many of the communities regarded the committees as “intruders
who spy on them to try to disqualify them from the program which creates tensions that can
sometimes get physical.” These issues were exacerbated by the fact that committee
members often did not understand the targeting criteria properly and so were wrongly
identifying ineligible households.
Poor relief programmes can, therefore, also increase social tensions in communities.
106
This is especially the case when people who are eligible, or who consider themselves to
be living on a low-incomes, are unable to access the scheme. Social tensions are further
worsened by the fact that targeting mechanisms such as PMT formulae are often poorly
understood by the community due to their complex nature. For example:
• In Lebanon, the introduction of a PMT resulted in riots breaking out in refugee
camps.
107
• An evaluation of Egypt’s TKP has found that, while beneficiaries found the
programme to be fair, those with poverty scores near the cut-off were the most
likely to consider the targeting process to be unfair, which led to increased social
tensions.
108
104
World Bank (2019b).
105
World Bank (2018).
106
See, for example: Cameron & Shah (2014); Deacon (2005); Sepúlveda & Nyst (2012).
107
Kidd & Wylde (2011).
108
United Nations Economic and Social Commission for Western Asia (2021).
4 Consequences of the World Bank and IMF’s approach
33
• In Jordan, UNICEF (2020) noted that “the benefit distribution [of Takaful] could
potentially create social sensitivities between project beneficiaries and non-project
beneficiaries within the same community […] if the targeting mechanism is not
transparent enough.”
• In Morocco, the World Bank stated that the social registry would lead to many
beneficiaries exiting programmes and it would be important “to develop a clear
exit strategy in order to avoid social tensions.”
109
• Lastly, in Yemen – in which 75 per cent of the population are living on less than
USD 3.10 (PPP) a day – there are likely social tensions due to the fact that only a
small proportion of the population are recipients of the Social Welfare Fund.
The best means of limiting social tensions is to ensure that the eligibility criteria is clear
and transparent. By far the simplest way to do this is to implement universal, or near
universal, lifecycle schemes which are accessed by everyone living on low, middle and
high incomes. Recipients living in poverty are not shamed for being enrolled on the
programme, because they qualify along with the rest of the population. Indeed, under an
inclusive lifecycle system, individuals are entitled to social security because of what they
have contributed – or will contribute, in the case of children – to society, even if they are
not part of a formal contributory scheme. As McClanahan (2019) explains, these
contributions can be made throughout the lifecycle, including by “working, raising children,
caring for older people or persons with a disability, and the payment of (direct and indirect)
taxes.”
4.3 Weakening the social contract and limiting fiscal space
Poor relief schemes are not fiscally sustainable because taxpayers do not want to pay for
them.
110
As Kidd et al (2018) explain: “programmes targeted at poor women, men and
children tend to have low population coverage and low benefit levels. This is because the poor
typically have limited political influence and power and, as a result, governments are less
willing to invest in them, since they will not gain the political rewards in elections.” Indeed,
the majority of taxpayers, including the politically engaged middle-class, will not want to
invest in a scheme from which they themselves do not benefit. This means that poor relief
schemes are at greater risk of shrinking or disappearing, as happened to the famous
Prospera programme in Mexico.
111
109
World Bank (2017b).
110
See, for example: Mkandawire (2005); Sen (1995).
111
Kidd (2019a).
4 Consequences of the World Bank and IMF’s approach
34
In contrast, schemes with higher coverage receive greater public support and, as a result,
are more sustainable both financially and politically. Not only do schemes attract higher
taxes and promote economic growth (therefore increasing the necessary fiscal space) but
they can become an important political tool. For example, political parties may promise to
increase coverage levels, or transfer values, during elections. In Mauritius, for example,
increases in the benefit level of the universal social pension correlate with election
victories in 1995, 2005, 2014 and 2019.
112
Meanwhile, attempts to means test the pension
have proven to be extremely unpopular. As Willmore (2012) notes, when the Government
of Mauritius targeted their old age pension, “the governing coalition lost the general
elections of July 2005, and the new government moved quickly to restore universal
pensions.”
113
When sectors of a population do not qualify for, or are exited from a social security
system – or when they lose out on subsidies and do not qualify for compensation
programmes – this can lead to civil unrest. For example, in 2017, Iran decided – with
support from the IMF – to poverty target its universal cash transfer scheme. The reform
proved to be extremely unpopular and, in a context of declining living standards, led to
protests.
114
Rather than addressing the political risks of failing to introduce schemes with
broader coverage, the IFIs tend to imply that poverty-targeted schemes simply need to be
marketed better to the proportion of the population that cannot access the schemes. As
Alston (2018) notes, the IMF is aware of the implications of fiscal austerity and removing
universal benefits such as subsidies, but “instead of embracing a politically and socially
sustainable social protection policy, it emphasizes communications strategies, sequencing and
‘depoliticization’ as solutions.”
When trust in the government to implement an effective social security system is low, it is
essential that schemes target more than just the extreme poor. Programmes with broader
coverage are important if States are to arrest soaring poverty rates, win the trust of their
populations, and compensate for the impacts of austerity measures. However, by failing to
implement social security schemes that are both redistributive and win the support of the
“missing middle”, the State will continue to undermine the establishment of a stronger
social contract.
115
112
Knox-Vydmanov (2021).
113
Willmore (2012).
114
Bakvis (2018).
115
Kidd, Axelsson et al (2020).
4 Consequences of the World Bank and IMF’s approach
35
4.4 Accountability of governments to their populations is
weakened
As discussed in Section 3, IFIs hold a lot of power over governments because they can
threaten to withdraw or not disburse tranches of a loan. Indeed, when Iran introduced a
universal cash transfer in 2011 to compensate for fuel subsidy reform, this was likely
because it was not under an IMF programme and was better able to implement such a
large-scale scheme. The IFIs’ influence, therefore, weakens government accountability
because, rather than act as a duty bearer to its population, the government answers to the
IFIs instead. Further, schemes that employ conditions, or are poverty-targeted, are less
likely to be enshrined in law, which limits accountability and reduces the extent to which
the population feel entitled to a scheme, as a right. As such, the social contract is
weakened because governments are not necessarily able to implement the schemes that
taxpayers would support.
116
In addition, Sepúlveda and Nyst (2012) explain that: “in order
to ensure a strong, effective, transparent and accountable social protection system,
beneficiaries must be able to identify actors who bear responsibilities in allocating the
entitlement that they receive.” This process is limited in the MENA region, for it is
extremely difficult for citizens and residents to hold IFIs to account.
4.5 The ability of countries to build inclusive, modern
systems is undermined
As discussed above, the IFIs’ package undermines the development of inclusive, modern
social security systems. A lot of money and political attention is diverted, for example,
towards building poverty targeting systems such as social registries, or improving poverty
targeting formulas, with the purported aim of establishing these mechanisms as the
building blocks of a State’s social security systems. However, the most sustainable means
of arresting soaring poverty rates and compensating for structural adjustment measures is
to implement an inclusive, lifecycle social security system.
The absence of progressive modern systems has limited how effectively countries have
responded to the COVID-19 pandemic. As indicated above, Sibun (2021) has found that
Morocco was the only country in the region to invest at least 2 per cent of GDP in a social
security response, which has been suggested as a minimally adequate stimulus response
to support economic recovery. It is no surprise that, out of all the countries in the MENA
region, Morocco is the only one that now appears to be making significant strides towards
116
Kidd, Axelsson et al (2020).
4 Consequences of the World Bank and IMF’s approach
36
strengthening its old age pension and child benefit schemes. In contrast, the World Bank
is encouraging the Government of Tunisia to reduce the money it is spending on fuel
subsidies – which amounts to 2 per cent of GDP. However, as discussed earlier, the social
security schemes that the Bank is promoting will amount to only 0.13 per cent of GDP, a
minimal amount.
117
Indeed, the World Bank notes that Tunisia’s Family Allowance will
focus “on mitigating the impact of the pandemic on families with children, while protecting
their human capital.”
118
However, when only 10 per cent of children aged 0-5 are
benefiting, the impacts on the national population will be minimal. Likewise, in a global
review of IMF programmes, the ILO has found that, in 2020, IMF staff consistently
recommended that all cash transfer programmes and social services that were extended
during the pandemic should be both temporary and targeted.
119
This contrasts with the IFIs’ rhetoric during the COVID-19 pandemic. In 2021, for example,
Malpass (2021), the World Bank Group President, stated the following: “… we need to build
social protection systems that protect everyone. The COVID-19 crisis has underlined the
absence of effective schemes to protect informal workers. Governments should consider
developing integrated, universal social protection systems to support both the goal of
achieving universal social protection by 2030 and the goal of accelerating the growth of better
jobs”. Such rhetoric does not reflect what the IFIs are promoting on the ground. In fact,
the paradigms of poor relief schemes and inclusive lifecycle schemes are diametrically
different. Under the former, individuals are not entitled to a minimum social security floor
that addresses their risks across the lifecycle. As such, poor relief schemes are not
building blocks for “progressive universality”, as the IFIs claim. In order to progress towards
an inclusive lifecycle system, policymakers must utilise a different paradigm. Therefore,
the continued promotion of poor relief schemes will hinder countries’ abilities to
implement universal social security systems by 2030.
117
The Amen Social Programme will cost 0.1 per cent, and the Family Allowance component a further 0.03 per cent
118
World Bank (2021b).
119
Razavi et al. (2021).
5 Why do the IFIs promote poor relief schemes?
37
5 Why do the IFIs promote poor relief schemes?
There are many reasons why the IMF and World Bank promote poor relief around the
world. In Lebanon, the World Bank has noted that “social protection programs, including
old-age pensions, universal health coverage, and even unemployment insurance are among the
types of programs that Lebanon needs to strengthen or develop,”
120
which appears to indicate
that the IFI recognises the importance of lifecycle schemes (or, at least, pensions) but
prefers instead to focus on implementing poor relief. Although an exhaustive list will not
be provided to explain why the IFIs prefer to promote poor relief schemes, several
reasons will be discussed below.
Firstly, the IFIs promote poor relief schemes because they are guided by ideological
thinking and a resulting framework of reference. As discussed above, low levels of
investment in social security align well with a neo-liberal vision of low taxes and a small
state. This is likely exacerbated by negative narratives and understandings on the reasons
for poverty which are used to justify why, for example, conditions should be attached to
benefits. Such narratives can also justify why schemes should be small, with low
coverage: for example, under a neo-liberal vision, there is a perception that taxpayers
should not have to fund the lifestyles of the “undeserving poor” who have labour capacity
but have not managed to improve their quality of life. As such, even though the IFIs claim
that their schemes are “pro-poor”, in fact, they are “pro-rich”.
121
Second, as this paper has shown, the IFIs’ messaging creates smoke and mirrors which
confuse policymakers. In Mongolia, for example, the World Bank stated that its universal
child benefit was “not … well-targeted and not effective in protecting the poor”, despite the
scheme reaching virtually all children living on low incomes.
122
In Kenya, meanwhile, the
World Bank released a report claiming that the universal social pension only reached 43
per cent of over-70s. This analysis was based on several errors and coverage was, in fact,
between 83 and 100 per cent, depending on the data source used.
123
Policymakers and
practitioners, even within the IFIs, could therefore be misled by this messaging into
thinking that poor relief schemes are indeed more effective at alleviating poverty. Or, that
there is not the fiscal space to gradually implement a universal lifecycle scheme.
Third, there are financial incentives driving the IFIs, particularly the World Bank, which
ultimately acts as a) a bank that has to sell loans to survive and b) a form of consultancy
120
World Bank (2021a).
121
Kidd (2019b).
122
Kidd (2018a).
123
Kidd (2019c).
5 Why do the IFIs promote poor relief schemes?
38
business that must pay its staff. A social registry, for example, is a product that they aim
to sell to countries through loans. Kidd, et al (2021) explain that the World Bank has been
at the forefront of selling social registries, incorporating the costs within loans, and
“despite their failures, social registries continue to pop up in country after country, often driven
by donors who oversell their efficacy and, in many cases, persuade highly indebted.
governments to take out loans to finance them.” In the same vein, in order to justify the
loans, it is necessary to show that they would deliver productive. Consequently, the World
Bank promotes poor relief schemes that they can sell as “productive” – such as CCTs and
workfare programmes – since governments are highly unlikely to finance ‘unconditional’
programmes for the ‘poor’ due to their lack of popularity. Similarly, governments can
happily finance universal lifecycle schemes from national resources, without loans, due to
their popularity.
Finally, inclusive lifecycle schemes reduce the IFIs’ influence in a country since countries
would not need the IFI’s support to finance or implement them. Although the IFIs argue
that lifecycle schemes are inefficient and cost too much to be fiscally sustainable, as has
been demonstrated, schemes with high coverage are more popular and, therefore,
taxpayers are more willing to fund them though their taxes. Consequently, as countries
transition towards implementing lifecycle schemes which receive support from large
sectors of the population, governments are less likely to take out loans and the IFIs lose
their influence in the country.
6 Conclusion
39
6 Conclusion
The IMF and World Bank promote a poor relief social security package not only in the
MENA region but in other low- and middle-income countries around the world. These
programmes are too small to address soaring poverty and utilise dubious targeting
methodologies which cannot effectively identify the target group, in other words “the
poor.” In contexts where a high proportion of the population is living on low incomes, it is
essential that more inclusive schemes with broader coverage are introduced. This is
especially important when taking into account that the IMF and World Bank have
encouraged countries to reduce or remove universal or near-universal food and fuel
subsidies, which have historically been the most important form of income support. Under
their preferred schemes, only a small subsection of the population is compensated for this
loss, and may experience shame and stigma as a result.
Despite evidence showing that inclusive, lifecycle schemes are more effective at reaching
persons living on low incomes, the IFIs often use smoke and mirrors to persuade policy
makers that this is not the case. In reality, the IFIs are driven by their ideological beliefs
and seek to implement schemes that align with a neo-liberal model, with low taxes and a
small state. Despite claims that poor relief schemes are “pro-poor”, only a small segment
of households living on low incomes are reached. In reality, therefore, the IFIs are pro-rich
in their approach, as a smaller social security system entails low taxes, which benefits the
rich much more than the poor. In addition, poor relief schemes are good for the IFIs’
business, whereas a tax-financed social security system – that is popular across the
wealth distribution – would not be funded by loans. Consequently, when a government
moves towards implementing an inclusive, modern lifecycle social security system, it is
also putting in place the steps to reduce the IFIs’ influence within the country.
In recent years, especially with the COVID-19 pandemic, the World Bank and IMF have
indicated that there is a need to build inclusive systems. However, on the ground, they
continue to promote poor relief schemes, using arguments such as the fact that there is
limited fiscal space, or that a country’s economic, political, and social circumstances and
constraints prevent a scheme with broader coverage from being introduced. The IFIs
claim that implementing a poor relief scheme is the first step towards “progressive
universalism”, and that, over time, coverage of the scheme can be increased, but are
unable to produce evidence to show that this is the case (and, in fact, they used to argue
the opposite
124
).
124
Kidd (2015).
6 Conclusion
40
The IFIs’ efforts to promote poor relief schemes undermine countries’ abilities to develop
modern, inclusive social security systems. The two approaches operate under
fundamentally different paradigms: a poor relief scheme aligns with a neo-liberal
approach, while an inclusive lifecycle system is underpinned by the right to social security
for all persons. To implement a lifecycle system requires a government to shift paradigms,
as well as to change its operational practices. Further, in a context of fiscal constraints,
there are other ways to achieve “progressive universality” that are more cost effective and
sustainable in the long run. For example, an old age pension could initially be provided
for all older persons above the age of 80 then, over time, the eligibility age can be
reduced. This ensures that the scheme achieves broad support from everyone across the
wealth distribution, thereby fostering the fiscal and political sustainability of the scheme.
There are some indications of paradigm shifts within the MENA region. Morocco, for
example, has announced that it will universalise its child benefit and increase the
coverage of its old age pension. However, without a serious shift in their institutional
approach, the two IFIs will continue hinder governments’ attempts to develop inclusive,
modern social security systems, build the social contract and drive economic growth while
continuing to promote a 19
th
century poor relief approach that undermines trust in
government and runs the risk of increasing social unrest, the last thing that the MENA
region requires at this point in its history.
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41
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