Social protection amidst fiscal uncertainties: Will the anchor hold?

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Social protection amidst fiscal uncertainties: Will the anchor hold?

Category : Advocacy Paper

The clarion call for productive inclusion programs in the social sector, at its core represents a broad-based affirmation of market-driven solutions to Africa’s topmost policy questions; poverty, inequality and exclusion. There are various reasons that makes such a call justified; uncertain fiscal performance, changing international aid landscape and the unintended consequences of creating an entitlement culture, may be few of such reasons . It is important also to recognize that any meaningful progress towards eradicating extreme poverty by 2030 (see SDG#1) will depend largely on focusing public expenditure on social programs that create livelihood opportunities for majority of persons living under $1.25 a day in Ghana’s poorest districts (see Ghana Poverty Map 2015). This is the philosophical underpinnings of Livelihood Empowerment Against Poverty (LEAP) and other social protection programs such as Labor Intensive Public Works (LIPW) and Ghana School Feeding Program (GSFP). That notwithstanding there are sustainability issues to discuss.

Figure. Program Impact Dashboard -LEAP and LIPW


Sustainability Risks

There are essentially three sources of risks that faces LEAP and LIPW at both the policy and project level:

  1. Fiscal Uncertainties (policy and project level).
  2. Efficiency gaps in project delivery.
  3. Enforceability of Service Level Agreement (SLA) between Metropolitan, Municipality and District Assemblies (MMDAs), and local contractors under LIPW.

Fiscal Uncertainties: The change in policy direction by the new administration “from taxation to production” was accompanied by aggressive tax reforms designed to boost consumer spending, without any significant scale back in expenditure on public goods and services. Whether 2017 fiscal outturn will validate this theory, remains to be seen. But by end of first quarter 2017, Ghana’s total revenues/GDP ratio had declined year-on-year (see fig. 3) although revenue registered a 14 per cent growth in nominal terms within same period.

Although growth is expected to rebound by close of year, the markets continue to be cautiously optimistic considering high debt burden (67.5% of GDP as at May 2017) which has limited Government’s fiscal space. The invasion of armyworms on farm lands also poses a risk to growth outlook as the current growth strategy hinges on achieving high productivity in agriculture. The net effect of these downside risks is the adverse impact on government’s fiscal space. Given the intense competition for a bigger portion of the revenue pie, it may be reasonable to expect some short-term adjustments that could disrupt planned spending on social intervention programs.

This is why…

We argue that despite the immense contribution of social protection to reducing extreme poverty, there are important questions on how to transform social protection programming into a productive inclusion enterprise to make it sustainable and responsive to Ghana’s fiscal realities.

[1] Handa, S., Park, M.J., Darko, R.O., Osei-Akoto, I., Davis, B. & Diadone, S., 2013. Livelihood Empowerment against Poverty Impact Evaluation. Carolina Population Center, University of North Carolina. Available here. [Accessed July 22, 2018]

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