Social Safety Net Programs Help Millions Escape Poverty

Among the very poor who received safety net benefits, 36 percent escaped extreme poverty, providing clear evidence that social safety net programs are making a substantial impact in the global fight against poverty, says a new World Bank Group report.

The impact of social safety nets on poverty is measured based on available household data from 79 countries by comparing the welfare of the safety nets beneficiaries to what it would have been had they not received such support.

Data from the State of the Social Safety Nets 2018 report shows that safety nets,which include cash, in-kind transfers, social pensions, public works, and school feeding programs targeted to poor and vulnerable households—also lower inequality, and reduce the poverty gap by about 45 percent, even if they do not emerge from poverty. These positive effects of safety net transfers hold true for low and middle-income countries alike.

Despite the increased adoption of safety net programs by countries in recent years, global coverage of poor and vulnerable people remains inadequate. About 2.5 billion people worldwide are covered by a social safety net, of which 650 million are in the poorest 20 percent.  However, only one out of five persons living in a low-income country is covered by a social safety net. Furthermore, countries at high risk of natural disasters often have lower safety net coverage.

Developing and transition countries spend an average of 1.5 percent of GDP on social safety net programs. Many countries are spending more on such programs because they see the impact they make on poverty reduction. Countries in the Sub-Saharan Africa and Asia regions are also introducing flagship social safety net programs and are rapidly expanding coverage.

Spending as a percentage of GDP by Region are as follows: Europe and Central Asia, 2.2 percent; Sub-Saharan Africa, 1.5 percent; Latin America and the Caribbean, 1.5 percent; East Asia and Pacific, 1.1 percent; the Middle East and North Africa,1 percent; South Asia, 0.9 percent.

The report is the third in a series of studies that monitor and report on the growth and coverage of social safety nets in the developing world and helps benchmark where individual countries and regions stand in terms of social safety net spending, key performance indicators, and the impact on reducing poverty and inequality.

The analysis presented in the report uses administrative data for 142 countries and household survey data for 96 countries from the ASPIRE database, and provides much needed empirical evidence in the context of an increasing global focus on social protection, as evident in the SDGs.

Despite progress, much more needs to be done regarding social safety nets programs for the poor and vulnerable around the world. Significant gaps in coverage and benefit levels remain, and the international development community needs to continue working with such countries to address these disparities.