Social safety networks: Addressing inefficiencies and issues

This piece was written by Umesh Moramudali for Arutha in partnership with Factum. The original article appeared in The Morning newspaper.

While Sri Lanka has achieved a sense of economic stability compared to the previous year, economic mismanagement has pushed many people into poverty. 

According to World Bank estimates, approximately 25% of the people in Sri Lanka were living in poverty in 2022. A survey conducted by LIRNEasia following Sri Lanka’s sovereign default in 2022 estimated that seven million Sri Lankan were living in poverty, from which four million had fallen into poverty after 2019. 

This significant increase in poverty rates calls for an urgent need to establish a comprehensive social protection system in Sri Lanka. 

The International Monetary Fund (IMF) in its Extended Fund Facility (EFF) agreement with Sri Lanka also emphasised on the need to set up a comprehensive and efficient social protection system and made it mandatory for the Government to spend 0.6% of GDP in social protection. 

In that context, the Government introduced the Aswesuma programme to provide cash support to two million households identified as poor. 

Samurdhi to Aswesuma: Why and how?

The objective of Aswesuma, as often explained by the Government, is to establish an efficient cash transfer system to support the poor and vulnerable. To do this, Aswesuma replaces the cash transfer task of Samurdhi that was introduced in 1995. Therefore, before going into Aswasuma in detail, it is important to understand why the Aswesuma scheme was required as a replacement for Samurdhi, which has been the major social safety net scheme in Sri Lanka for almost three decades. 

Samurdhi was introduced in 1995 by the Government led by Chandrika Bandaranaike Kumaratunga. It replaced the previous social safety net scheme Janasaviya, which the Bandaranaike Government criticised for political favouritism in selecting beneficiaries.

At its inception, the Samurdhi scheme had two major objectives. One was to provide cash to those who are poor and vulnerable through the Samurdhi banking network established around the country. The other was the livelihood development of the poor. The former function is now carried out through Aswesuma. 

Although the objective of Samurdhi was to eliminate politicisation of social safety nets, it failed to achieve this. While Janasaviya had been aligned towards United National Party (UNP) supporters, Samurdhi was biased towards the supporters of the ruling party, the People’s Alliance (PA). 

The Samurdhi Authority was established in 1995 to carry out the mandates of the Samurdhi programme, under which Samurdhi officers were recruited to coordinate with beneficiaries, assess applications to receive Samurdhi benefits (cash transfers and other benefits), and facilitate engagements among Samurdhi beneficiaries. 

Most of these Samurdhi officers were political appointees who had close connections to the ruling party. Therefore, eligibility to receive Samurdhi was often determined based on political affiliations. Furthermore, politically-motivated recruitments meant that there were limited merit-based recruitments to the Samurdhi Authority. 

This resulted in the Samurdhi scheme having two major issues: 1) inclusion and exclusion errors and 2) administrative inefficiencies. 

Inclusion and exclusion errors meant that most of the poor and vulnerable who were in dire need of support from the Government did not receive the support through Samurdhi. A recent survey conducted by LIRNEasia shows that out of 1.7 million households that were receiving Samurdhi, only 40% were poor. 

The Samurdhi programme had many administrative inefficiencies. The same survey conducted by LIRNEasia showed that the average waiting period to be included in the Samurdhi recipient list was three years and nine months. 

Obtaining cash transfers was not easy either, since they could only be obtained through Samurdhi Banks. The average waiting time for Samurdhi recipients to receive cash transfers was four hours. Moreover, Samurdhi Banks are not located in every town and there is only one Samurdhi Bank per 16 Grama Niladhari divisions. Thus, recipients had to spend 1.5 hours on average to travel to a Samurdhi Bank. 

The inefficiencies of Samurdhi Banks meant that people had to wait a long time to receive the money. Survey results from LIRNEasia show that the average waiting time at the bank was 2.5 hours. 

Social safety net reforms 

The need to address the inefficiencies and issues of the social safety net system has long been known. In 2002, the Government proposed to establish the Welfare Benefits Board (WBB) through which it expected to depoliticise and streamline social protection schemes in the country. 

The gazette to establish the WBB was issued in 2002. However, the change of Government in 2004 put a hold on making the WBB operational. The idea of making the WBB functional and addressing the issues of social protection systems surfaced again in 2016. This time, the Government obtained the support of the World Bank to carry out social protection initiatives. 

In December 2016, the World Bank agreed to provide a concessional loan of $ 75 million to be paid in 24 years with a five-year grace period. There were a few key objectives of this project. One was to establish a social registry which would be a unified database of citizens containing details on family composition and economic attributes. 

Secondly, the project aimed to develop new eligibility criteria to assess the eligibility of households to receive support from the Government. Thirdly, it was required to collect data from applicants to assess their eligibility based on new eligibility criteria and record that data in the social registry. Fourthly, the project also aimed to bring many different social protection schemes under one entity and make cash transfers more efficient. 

“Sri Lanka has more than 30 welfare programmes operated by 11 different ministries. A lack of digital record-keeping limits their capacity to coordinate, monitor, and evaluate, and prevent fraud and mismanagement. While programme costs have risen gradually over time, coverage of the poorest households has fallen,” the World Bank said in a statement when the project was launched. 

Therefore, the overall aim of the social safety net project was to digitise the data regarding those who required Government support, increase the accuracy of targeting to identify those who actually needed support based on data, and eliminate inefficiencies in distributing cash transfers. 

This transition meant that Government cash transfers, including selecting beneficiaries, would be handled by the WBB instead of the Samurdhi Authority, the Secretariat for Elders, the Secretariat for Persons with Disabilities, and a few other institutions. 

This meant that Samurdhi officials, most of whom were political appointees, would have had to give up their power and influence over those who requested cash transfers. Therefore, there was significant resistance from Samurdhi officers to social safety net projects and the proposed reforms. 

Accordingly, the progress on the social safety net project was slow. The 2018 constitutional coup and the change of Government in 2019 further delayed the progress of reforms. New eligibility criteria were gazetted in 2019, but with the Government changing in 2019, data collection was further delayed. 

This meant Sri Lanka failed to establish a social registry by 2020, making it extremely difficult to identify those who required Government cash support to tackle the adverse impact of Covid-19. 

Following much delay, the Government revamped the social protection system in late 2022 after Sri Lanka declared sovereign default. On this occasion, the reforms were expedited. The Government announced that it aimed to introduce a new cash transfer scheme, which it termed as Aswesuma, and requested the poor and vulnerable to submit applications. 

Upon receiving applications, the Government initiated data collection based on a questionnaire developed using the new eligibility criteria gazetted in 2019. However, Grama Niladharis and Samurdhi officers refused to collect data, so the Government proceeded to carry out data collection by employing graduates and school leavers trained by officers of the Department of Census and Statistics. 

Data collection was undertaken through mobile devices, which recorded all applicant data to one database. This database then was used to establish a social registry, referred to as the Welfare Benefit Information System (WBIS). 

Political will 

One may ask, how did Aswesuma suddenly begin? The answer to this question is twofold. 

Firstly, social safety net reforms were underway since 2016 and Aswesuma was the term the Government used to brand the reformed social safety net project that had been in the works for years. 

Secondly, the IMF, the World Bank, and the Asian Development Bank (ADB), three multilateral agencies that provided emergency loans to Sri Lanka during the crisis, insisted on providing sufficient cash transfers to the poor and vulnerable and establishing an efficient system for this purpose. The IMF imposed a minimum compulsory spend for social protection as a condition in the EFF. 

“The authorities have committed to Social Safety Net (SSN) spending of Rs. 187 billion (0.6% of GDP) in 2023. This spending floor target covers the four SSN programmes monitored under the EFF-supported programme and takes into account projected inflation in 2023 to mitigate real erosion of the cash transfers per household. 

“Total beneficiaries are initially expected to remain at around 3.3 million (the same level as at end-2022); going forward, the total number of beneficiaries would be determined by the application of the new eligibility criteria. Under the new criteria, the composition is expected to improve owing to lower inclusion and exclusion errors for all SSN programmes. Beyond 2023, the authorities plan to maintain SSN spending at least at around 0.6-0.7% of GDP,” the IMF Staff Report stated. 

While commitments to the IMF ensure the short-term implementation of the social safety net during the period of the IMF programme, it leaves doubts about the long-term substance of social safety net reforms. 

Having an efficient social protection system is an essential need of a country and it is the responsibility of the Government to work towards such a social protection system. Unfortunately, Sri Lanka’s history suggests that improving social protection was mostly driven by the Government’s obligation to officials. The Government has not really owned social protection reforms or ensured the sustainability of new social protection schemes. 

This is more visible in Budget 2024 as well. While President Ranil Wickremesinghe referred to social protection a few times in the Budget speech and emphasised plans to implement Aswesuma, his statements and budget estimates on safety nets create more confusion than clarity. 

Firstly, there are many uncertainties regarding the number of Aswesuma beneficiaries. Gazette No. 2328/13, published in April 2023, states that 400,000 recipients identified as transitional will receive a cash transfer of Rs. 2,500 per month only until December 2023, while those identified as vulnerable will receive a cash transfer of Rs. 5,000 per month until March 2024. 

If the cash transfers are undertaken as per the gazette, only 1.6 million will receive Aswesuma benefits by March 2024. Given the high poverty rates and negative economic growth Sri Lanka experienced in 2023, it is unlikely that many people will be lifted out of poverty this year, so providing cash transfers to all identified beneficiaries remains crucial. However, the Government has provided little clarity on this. 

Secondly, although allowances for disability, kidney disease, and the elderly are supposed to be provided through the WBB as part of Aswesuma, there is a lack of clarity on how this will be done as well. 

Furthermore, the Government is yet to finalise the complaints pertaining to Aswesuma. Until these are finalised, some Samurdhi recipients will receive Samurdhi cash transfers. This has led to further confusion amongst the people regarding the Samurdhi and Aswesuma programmes. Some seem to think that both co-exist while the original plan was to replace the cash transfer aspect of Samurdhi through Aswesuma. 

Learning from Pakistan’s success 

Speaking at a recent conference organised by the Centre for Poverty Analysis (CEPA), Dr. Shandana Khan Mohmand made an interesting remark on the success of the Benazir Income Support Programme (BISP), a key social protection programme in Pakistan. The BISP was introduced in 2008 and named after former Prime Minister of Pakistan Benazir Bhutto, who was assassinated in 2007. 

Dr. Mohmand pointed out that in spite of many changes of government and the politics attached to the name of the social protection programme, the BISP had remained resilient and evolved to incorporate changes and expand coverage. When it was introduced, those who were eligible for the BISP were identified by parliamentarians of all parties. However, this was later changed to adopt the Poverty Scorecard (PSC) method to determine eligibility in order to ensure better targeting and to increase the effectiveness of the programme. 

The amount of cash provided also increased to adapt to the increasing cost of living. Initially, PKR 1,000 was provided as cash support under the BISP and this was subsequently raised to PKR 1,200 in July 2013 and PKR 1,500 in July 2014. After a number of increments, recipients of BISP currently receive approximately PKR 2,800 per month. 

The eligibility for the BISP is determined based on data collected from the National Socio-Economic Registry (NSER) survey. The welfare status of a household is determined on a scale between 0-100 of the Proxy Means Test (PMT) based on NSER survey data and the PMT cutoff is amended by the BISP on the basis of available fiscal space. All families falling within the approved PMT cutoff score are provided cash assistance. 

The important lesson from Pakistan here is the constant evolution of the social protection programme, accommodating feedback regarding weaknesses and issues of the scheme. 

Fix the basics and own the programme

It is important to remember why Aswesuma was introduced. It is not merely the change of a name, but a broader part of social protection reforms that Sri Lanka has been struggling with over the past three decades. 

Establishing the WBB, setting up the social registry (digitised database of those who request social protection), and attempting to depoliticise cash transfers are important steps towards an efficient social protection system. Yet, this doesn’t mean that the existing system, selection criteria, cash amounts, and cash distribution methods should remain in their current form. They can and should evolve, incorporating changes to address the major objective of protecting the poor and vulnerable. 

It is necessary that Aswesuma and Sri Lanka’s overall social protection system evolve, similar to the one in Pakistan. That evolution should facilitate the needs of the poor and vulnerable, and not the needs of politicians or vested interest groups. 

The key to such evolution is building capacity within the WBB, strengthening communication within Government institutions, frequently reevaluating/reassessing poverty levels, and constantly updating WBIS, the WBB, and other Government institutions owning the reforms. These actions require substantial investment in the WBB to recruit sufficient and competent people to run the institutions, maintain the digitised data system (WBIS), and provide autonomy to the WBB to make decisions. 

The views expressed here are the author’s own and do not necessarily reflect the organisation’s.

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