ISLAMABAD: The government has requested the World Bank for a loan of $600 million to roll out an innovative hybrid social protection scheme to support its aspirations around risk mitigation and financial inclusion among the poor and informal workers.
The scheme will blend social assistance with social risk mitigation elements to help reduce the vulnerability of the missing middle to shocks under the ‘Pakistan Crisis-Resilient Social Protection’ programme, according to a new World Bank document released on Saturday.
The basic model will be a contributory savings scheme with matching incentives, with a short-to-medium term horizon for withdrawals. It will build on lessons from similar programmes in other countries. Individuals would not be penalised for early withdrawal of their own savings but will not have access to contributions before reaching the minimum time commitment.
This would allow funds to accumulate for later release either on an emergency basis during a crisis or at other significant life events like aging, illness or death, after this period. Such a model is expected to be most appropriate for Pakistan’s context, given the existing liquidity and savings constraints among informal workers and the nature and frequency of shocks, especially post-Covid.
Funds will be released either during a crisis or events like aging, illness or death
Since this is a new scheme in Pakistan, the design parameters will be tested rigorously during the first phase with support from the technical assistance component of the World Bank. During the first phase, the hybrid scheme will be open to a subset of current and existing beneficiaries of the Benazir Income Support Programme, although if successful the scheme could be gradually extended to a much wider population.
The Covid-19 crisis brought to light the need to provide protection to both the poorest and those who fall outside the existing safety net programmes and are excluded from the limited formal systems. This requires introducing the next generation of interventions that move beyond social assistance and are able to bring a larger segment of the vulnerable population under the social protection umbrella, consolidating and advancing existing social protection delivery systems to make them more responsive to crisis situations, and refocusing social assistance on safeguarding and rebuilding human capital after the crisis.
The World Bank document says that the programme will support enhancement of the social protection delivery systems, including the social registry and biometric payments system, to increase the ability of the social protection system overall to adapt to the needs of the target population during both crisis and normal times.
At the same time, it aims to build resilience against crisis among poor and vulnerable households by incentivising protection and accumulation of human capital through the conditional cash transfers and household savings through hybrid social protection scheme.
Pakistan has made substantial investments in its social protection system over more than a decade. Pakistan’s social protection system, established in 2008, consists of several flagship social assistance programmes that try to respond to the needs of the poor and vulnerable highlighted in the ‘Ehsaas’ agenda. These programmes are administered at the federal level, but the provinces have also launched parallel social protection programmes to complement the objectives of ‘Ehsaas’.
The document says there is a need to boost resilience for the large ‘missing middle’ that is highly vulnerable to shocks and remains uncovered. The Covid-19 crisis underscored this vulnerability when millions of people lost jobs and did not have access to any insurance or savings mechanisms to help them cope.
The planned 2021 safety net expansion to an additional over two million ‘Kafaalat’ beneficiaries will provide them some support, but the majority will remain uncovered and without a structured intervention, and continue to be hard hit during crises, it says.
The capacity of existing social registry will be transformed to respond to a range of crises and changing vulnerabilities. First, it will support the government in moving away from infrequent, static approaches to a more frequent intake and registration for the social registry through introduction of a multi-entry, local, automated (Mela) system to capture and score socio-economic data on a regular basis to improve shock-responsiveness.
The Mela system will also be instrumental in capturing the data for needs assessments and eligibility determination of new potential beneficiaries to meet Kafaalat’s target of seven million families in 2021. Second, it will support defining key parameters for update such as frequency and the systematic use of mobile technology to facilitate the intake processes.
Third, it will support setting up and operationalisation of a provincially representative regulatory structure for the National Socio-Economic Registry (NSER) to ensure the ownership of provinces and promote transparency in decision making and data exchange between the NSER and social programmes at various levels.
Finally, it will support the systematisation of cross-checks and integration of big data and analytics into the social registry to enhance data quality, and ultimately improving performance.
Published in Dawn, January 11th, 2021