Race to the Next Income Frontier
Chapter

Chapter 18. Social Protection and Poverty Reduction in Senegal

Author(s):
Ali Mansoor, Salifou Issoufou, and Daouda Sembene
Published Date:
April 2018
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Author(s)
Oumar Bassirou Diop

Senegal is aiming to participate in the dynamics of economic emergence by establishing rational macroeconomic policies, improving its investment climate, making progress in structural reforms, fighting inequalities and disparities, and preserving human dignity and social inclusion. Some results were already achieved as of 2014 that have been deemed positive, with a 4.7 percent growth rate in GDP and a clear improvement in social indicators.

Social Protection

The Linkages between Social Inclusion and Inclusive Growth

Social inclusion consists of ensuring that all citizens have the mechanisms to participate actively in the development both of their grassroots communities and of society at large. It presumes that Senegalese citizens have access to essential social services and infrastructure, including education and training; health care and food; drinking water and sanitation; suitable living conditions, environment, and housing; decent employment; and rights and protection against risks of disasters. It also presumes they have access to economic assets, as well as the existence of a relevant system to redistribute the benefits of growth to reduce poverty significantly.

Accordingly, in a general context of impoverishment and increasing inequalities, in which the purchasing power of income from labor is eroding in its capacity to ensure the welfare, or even the survival, of individuals, relations between social protection and fighting poverty emerge as important stakes for any study of the issues of social exclusion and inclusion of vulnerable groups.

In connection with Senegal’s emergence plan, the Plan Sénégal Émergent, social inclusion encompasses the aspects of prevention, mitigation, adaptation, promotion, and transformation in a broader strategy of economic and social transformation. This strategy focuses on mechanisms, operations, or initiatives, formal and informal, designed to protect individuals, households, and communities, to enable them to more effectively prevent and protect themselves against risks and vulnerabilities, to have access to fundamental goods and services, to benefit from wealth creation, to join the dynamics of self-promotion, and to thrive. Social inclusion helps vulnerable groups gain socioeconomic autonomy through two mechanisms: (1) the optimization of potential through the initiatives or productive capacities of stakeholders and (2) the promotion of sustainable, inclusive economic growth.

The interconnections between social inclusion and the fight against poverty should make it possible to address a number of concerns and to meet the main challenges in connection with emergence.

The country’s widespread poverty makes it more vulnerable, which in turn exacerbates the conditions of poverty. Progress made in fighting poverty must be continued and strengthened through social safety nets, so that any gains achieved are not later sacrificed. In other words, policies that do not sufficiently recognize the correlation between poverty and vulnerability become another factor perpetuating poverty, opening the door to chronic poverty and handing it down from one generation to the next.

Accordingly, the social inclusion approach makes it possible to direct investment to address the requirements of the general public, particularly in the areas of health, education, housing, and employment, to promote solidarity, sustainable growth, and productivity.

General Understanding of the Linkages between Social Protection and Economic Growth

Social protection can contribute directly to economic growth through the following:

  • Increased human resources and productivity.

  • Improved operation of the labor market and enhanced labor productivity.

  • Development of entrepreneurial activities.

  • Accumulation (and protection) of assets.

  • Deepening of capital markets.

  • Stimulation of demand and development of local markets.

  • Facilitation of development of infrastructures.

  • Strengthening of social and political cohesion.

  • Making difficult economic reforms possible.

  • Making other sectors more efficient and effective.

Social protection can also contribute indirectly to growth through its effects on equity. By providing resources directly to poor or vulnerable persons, social protection programs are key factors in a country’s redistribution policies, which help reduce income inequality.

In general, recent research has shown that social protection expenditure is good for economic growth. Such expenditure may be even more important for countries in which the levels of social protection expenditure are very low. A recent study conducted by the World Bank (2013) on international data for the period 1996–2009 found that average expenditure on social safety nets varied between 0.75 percent of GDP for low-income countries to 5.82 percent of GDP for high-income countries. Moreover, a solid linkage was identified between social safety nets and economic growth. This implies that, within the countries, changes in the level of expenditure on social safety nets are positively liked to changes in growth.

In addition to the positive potential effects on economic growth, social protection can reduce chronic poverty. When implemented effectively, not only can social protection reduce chronic poverty today, but it is an important tool for breaking the cycle of poverty between the generations.

Is Social Protection Always Good for Growth?

While social protection policies and programs can contribute substantially to economic growth, and the absence of such interventions can hinder growth, it is not necessarily true that social protection operations always promote economic growth. There are several circumstances in which social protection to support economic growth may not be successful:

  • Excessive taxation.

  • Negative incentives to work.

  • Insufficient transfers (in terms of quantity, coverage, or timeliness).

  • Insufficient linkages to productive factors.

Trends in the Poverty Incidence

Insufficient, erratic economic growth dampened efforts to attain the goal of cutting the incidence of poverty (34 percent) in half in 2015. The adopted approach of the concept of “poverty” emphasizes the insecurity that affects a number of areas of human existence. An empirical approach to poverty takes the form of a basket of essential food and nonfood items for each individual or group of individuals, which they require to live under decent conditions.

The results of the Second Poverty Monitoring Survey in Senegal in 2010–11 brought to light positive changes in the rate of poverty reduction. In fact, the proportion of individuals living below the poverty line continued to decline from 55.2 percent in 2001 to 48.3 percent in 2005, to reach 46.7 percent in 2011 (Table 18.1). This proportion declined slightly between 2005 and 2011 in Dakar and in rural areas and stabilized in other urban centers. In 2011, the regions of Kolda (76.6 percent), Kédougou (71.3 percent), Sédhiou (68.3 percent), Fatick (67.8 percent), and Ziguinchor (66.8 percent) were found to have the highest levels of poverty.

TABLE 18.1Trends in Poverty Indicators in Senegal, by Urban/Rural Region, 2001, 2005, and 2011(Percent)
IndicatorsDakarOther UrbanRuralNational
2001 Annual Period
Poverty Incidence38.145.265.255.2
Depth of Poverty10.213.421.217.3
Severity of Poverty3.85.59.27.3
2005 Annual Period
Poverty Incidence28.141.459.048.3
Depth of Poverty6.811.620.215.5
Severity of Poverty2.44.89.57
2011 Annual Period
Poverty Incidence26.241.357.346.7
Depth of Poverty5.813.118.714.6
Severity of Poverty2.15.98.76.6
Source: ANSD 2012.
Source: ANSD 2012.

In terms of inequality, nearly half of total consumption in Senegal is attributed to the richest quintile of the population (Table 18.2). There has been a substantial increase in this proportion during the past 10 years. The share of the poorest quintile has remained substantially constant at only 7 percent of the total figure. In general, according to survey data, the inequalities have not worsened. The ratio of the proportion of consumption attributed to the richest quintile to that attributed to the poorest quintile did not change substantially between 2001 and 2011. This ratio remained at 7 for all surveys across these years, which means that the richest quintile of the population consumed seven times more than the poorest quintile. The Gini index, another poverty indicator, fell somewhat during the period.

TABLE 18.2Distribution of Expenditure by Population Quintile, Senegal, 2001, 2005, and 2011(Percent)
200120052011
Poorest6.96.87.0
Less Poor10.711.511.8
Moderate14.716.116.8
Less Rich20.923.323.6
Richest46.747.048.1
Ratio (richest/poorest)6.77.06.9
Gini Index39.238.137.8
Sources: ANSD; and World Bank.Note: Calculations are based on the Senegalese Household Survey 2, Senegal Poverty Monitoring Survey 1, and Senegal Poverty Monitoring Survey.
Sources: ANSD; and World Bank.Note: Calculations are based on the Senegalese Household Survey 2, Senegal Poverty Monitoring Survey 1, and Senegal Poverty Monitoring Survey.

The social protection system in Senegal is excessively narrow, as it is in all sub-Saharan African countries. The third pillar (“improving living conditions for vulnerable groups”) of Senegal’s first Poverty Reduction Strategy Paper in 2002 was devoted to this issue. The diagnostics on social protection in Senegal have brought to light the existence of formal social protection systems based on coverage of civil servants and other employees against risks—social security (Caisse de Sécurité Sociale [social security fund—CSS], Institutions de Prévoyance Maladie [health insurance institution—IPM]), Institution de Prévoyance Retraites [retirement insurance institution—IPRES]), and the Fonds National de Retraite [national retirement fund—FNR]), private insurance, and supplementary professional mutual societies. These systems are facing serious performance problems, and their capacities to meet various requirements in terms of social protection and risk management are limited. They will now be forced to face a series of substantial challenges in connection with the need to adapt to a changing labor environment, new socioprofessional and emerging household structures, and demographic upheavals in the coming decades.

It is an important matter to assess poverty in connection with the gender balance in general, and specifically among the aged and women. Such an approach will provide a view of changes in poverty among vulnerable people and in rural areas. Since implementation of the Poverty Reduction Strategy Paper, it has been found that, despite relatively moderate economic growth levels since the early 1990s, development of rural areas in Senegal continues to lag behind, hindered by structural vulnerabilities, inequitable access to public and private services, and a limited range of strategies to prevent, reduce, and address risks threatening rural households and vulnerable persons.

The Plan Sénégal Émergent is based on past results from poverty reduction strategies implemented during the period 2002–12 in connection with the first Poverty Reduction Strategy Paper and economic and social policy papers and builds on progress while addressing the profound causes of poverty to reduce its impact in terms of the vulnerabilities faced by the poor population. Despite past progress, a substantial share of the population is still exposed to poverty owing to a number of different factors, including vulnerabilities and inefficient implementation of social protection measures included in the National Strategy for Social Protection (2005–15) and incorporated as the third pillar of Senegal’s second Poverty Reduction Strategy Paper.

This segment of the population includes households living below the poverty threshold and those that are just above it, but could easily fall below it as a result of these vulnerabilities. It is likely that the poor and middle-class sectors, and possibly certain relatively affluent persons in the informal sector, cannot cover with their own resources all risks in connection with decreasing income and other shocks. Accordingly, a variety of social safety net programs have emerged to help the poor cope with the risks and shocks affecting their welfare.

In light of the delays in implementing programs to protect vulnerable groups and the acceleration of the development process in rural areas, in the Plan Sénégal Émergent, Senegal defined a social protection policy expanded to the poorest sectors with household security stipends and universal health coverage. The policy of social security or social inclusion should be considered an essential component of other policies and programs, with which they constitute a broader social development package. The main objective is to provide a complete, coherent set of policies that can help Senegal achieve greater social justice and equity in connection with its development effort. This is achieved through a series of policies and programs encompassing education, health, nutrition, and population strategy, as well as strategies for water purification and supply, food security, and specifically the development of irrigation, inclusive finance, enhanced autonomy for women, environmental protection and climate change management, disaster management, and social protection. These strategies and programs are complementary and are designed to strengthen the impact on poverty, vulnerability, and promotion of social cohesion.

With its universal health coverage initiative, Senegal aims to redirect radically the strategies and mechanisms to cover health expenditure to achieve a minimum rate of 75 percent coverage by 2017. Through this initiative, the government is using three supporting mechanisms: (1) decentralized development of health mutual societies, (2) reform of health insurance institutions, and (3) strengthening of the existing free mechanisms and implementation of free care for children 0–5 years of age.

Accordingly, the number of operational health mutual societies increased from 80 in 2003 to 237, including 217 community mutual health societies and 20 national-scale mutuals, in 2011. The number of beneficiaries is now estimated at 609,182, and accordingly, there is still much to be done to cover the entire rural and suburban populations. In 2014, 1,000,228 children between birth and five years of age benefited from free consultation initiatives, 470,278 children were immunized, and 12,066 pregnant women received free caesarian sections.

The household security stipend initiated by Senegal in 2013 provides quarterly allowances to households living in extreme poverty. The pilot phase covered nearly 48,000 households, and a generalized expansion phase beginning in 2014 reached 298,381 households against a target of 300,000 households. The goal in 2018 is to reach 400,000 vulnerable households.

The process of identifying vulnerable households for the single register pursued the objectives of Phase One of the National Household Security Stipend, targeting vulnerable households with children 6–12 years of age. For the forthcoming phases, the stipend should progressively target vulnerable households with young children and aged persons with a view to gradually reaching all poor and vulnerable households.

By expanding household security stipends to more households as identified by communities and simultaneously to all regions of the country, Senegal is taking new steps in fighting social inequalities with the aim of substantially correcting inequalities to achieve a better distribution of national wealth. Through the National Household Security Stipend, a new battle has been undertaken for universal school enrollment, health protection for children, and therefore a decline in infant mortality. In this fight against vulnerability and social exclusion of households through integrated, strengthened social protection, Senegal intends to promote education for children and to improve daily living conditions for households, particularly under the National Household Security Stipend program, launched on October 4, 2013. To benefit from the financial allocations under this inclusion program, households having children 0–5 years of age must register their children with the vital statistics register, enroll them in school, and ensure that they are regularly immunized. A total of 200,000 households were able to benefit from these stipends, in an overall amount of CFAF 25 billion, to spearhead the policy to reduce inequalities among the income quintiles.

Similarly, the process of establishing a simplified social protection regime in favor of small taxpayers was introduced in 2014. Even so, coverage of social protection is still insufficient, targeting leaves scope for improvement, coordination of interventions and resource allocations should be improved, and adequate financing for social protection must be ensured to meet the main challenges in transforming socioeconomic conditions for vulnerable groups.

Potential for Social Protection in Support of Growth

Senegal now faces domestic and external shocks that make social protection an important factor in any scenario of future economic growth. The successive domestic and external shocks, as evidenced by the food, energy, and financial crises of 2008–09, slowed economic growth after a period of relatively rapid expansion. Experience has also shown a relatively limited range of policy options and programs to help the chronically and transiently poor cope with these shocks. In an open economy in which a substantial share of the population is dependent on rain-fed agriculture and exposed to substantial health risks such as malaria or natural risks such as floods and droughts, as well as the variables in connection with the informal economy, social protection measures must be created, adapted, and intensified to meet the pressing needs of the future.

Expenditure levels on social protection and social safety nets in Senegal have always been fairly low. In 2003, total public expenditure in connection with social insurance and the social safety net was estimated at 1.16 percent of GDP, as against an average of 1.44 percent for sub-Saharan Africa (2.9 percent of GDP in Latin America and the Caribbean and 2.4 percent in Eastern Asia and the Pacific, for comparative purposes). Programs were generally acknowledged to be limited in scope, under the adverse effects of multiple institutions, suffering from a lack of coherence, dispersion of efforts, and duplications. Transfers under social assistance were often nonconditional, and targeting was based on poorly defined “vulnerable groups.” Certain programs were deemed to be geographically well targeted and effective in producing economic advantages through the creation of infrastructures in poor communities and by improving access to microcredit and income-generating activities.

The absence of existing social protection programs intended to ensure a broader response to the crisis meant that immediate responses to economic slowdowns led to a substantial drain on public resources, with emergency interventions that were probably favorable to economic growth. A number of recent examples are instructive. A drought during the early 2000s had a negative impact on agricultural production. One of the main responses was the government’s decision to cancel all debts contracted by farmers. This approach was applied indiscriminately and did not reflect the localized effects of the drought. This action led to a longer-term impact of adversely affecting rural credit, with a decline in reimbursement rates.

More recently, the response to the food, energy, and financial crises was to establish subsidies costing more than 3 percent of GDP. As the mechanisms were not in place to reach the poor effectively in the short term, substantial subsidies on commodities and energy had the effect of helping everyone, while removing the potential incentives (from the supply standpoint) that the increase in food prices should transmit to rural producers, thereby compromising the financial sustainability of public services. Moreover, financial slippage in 2008, partly in connection with tax funding to address the food and fuel price crises, left the government with an accumulation of unpaid invoices to national suppliers equivalent to approximately 3.75 percent of GDP, causing a further impediment to private growth, particularly in the construction and public works sectors.

Senegal’s challenge will be to design and implement social protection operations to foster economic growth. In light of the empirical proof of how social protection can contribute to economic growth, there are a number of activities that can make a greater contribution to economic growth based on social protection policies and programs in Senegal:

  • Social protection interventions can be used to promote development of human resources. Monetary transfers or food distribution linked to the use of health services and school enrollment rates can promote long-term economic growth and help Senegal reduce poverty.

  • Basic infrastructures can be established and agricultural productivity increased for poor communities through public works. Rural areas still suffer from a combination of dependence on low-productivity agriculture, increased vulnerability to food shortages during the preharvest period, and a shortage of basic infrastructures in the country’s poorest regions and departments. Effectively designed social safety net operations combined with other service programs can involve rural communities and authorities in creating the conditions required to protect rural populations from poverty while building household and community assets required for economic growth.

  • Interventions in the labor market can create “employability” and increase market integration rates. Rather than through subsidized loans to “entrepreneurs” that might adversely affect the long-term sustainability of the financial sector, active programs in the labor market can increase the level of professional experience and skill, particularly among young persons and the unemployed, giving them greater access to the labor market.

  • Social insurance, including expansion of the pension and insurance systems, can help create domestic capital markets in Senegal while reducing the risks for households. Formal social security reform, including more extended coverage, will play a role in supporting economic development and equity in society. Sustainable contribution systems can also relieve some of the budget pressure required for support during economic slowdowns. These systems can be extended to the informal sector, for example, through microinsurance combined with microfinance, and through mutual health societies.

Social protection and labor intervention policies can be effective in helping to reduce and eliminate poverty in Senegal in households and communities, specifically when the objectives are pursued simultaneously to capture the synergies of promoting economic growth. Achievement of these objectives also promotes social cohesion and equity. Although Senegal continues to enjoy a generally stable political climate, its inability to react to shocks creates a turbulent political climate that can adversely affect political stability in the long term, on which Senegal’s long-term growth outlook is dependent.

Conclusion

Senegal’s social protection system is excessively narrow, as it is in all sub-Saharan African countries. The third pillar (“improving living conditions for vulnerable groups”) of the first Poverty Reduction Strategy Paper in 2002 was devoted to this issue. The diagnostics on social protection in Senegal have revealed the existence of formal social protection systems based on coverage of civil servants and other employees against risks—social security (CSS, IPM, IPRES, and FNR), private insurance, and supplementary professional mutual societies. These systems are facing serious performance problems, and their capacities to meet various requirements in terms of social protection and risk management are limited. They will now be forced to confront a series of substantial challenges in connection with the need to adapt to a changing labor environment, new socioprofessional and emerging household structures, and demographic upheavals in the coming decades.

The policy of social protection or social inclusion should be considered an essential component of other policies and programs with which social protection and social inclusion constitute a broader social development package. The main objective is to provide a complete, coherent set of policies that can help Senegal achieve greater social justice and equity in connection with its development effort. This is achieved through a series of policies and programs encompassing strategies for education, health, nutrition, population, water purification and supply, food security, and specifically the development of irrigation, inclusive finance, women’s autonomy, environmental protection and climate change management, disaster management, and social protection. These strategies and programs are complementary and are designed to strengthen the impact on poverty, vulnerability, and promotion of social cohesion.

References

The author is grateful to Aline Coudouel, Philip English, Salifou Issoufou, and Alexei Kireyev for their careful reading and comments. The author would like to thank colleagues from the World Bank for their useful discussions. The views expressed are those of the author and do not necessarily represent those of the IMF or the Senegalese authorities.

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