The National Budget gives a good indication of how government prioritizes sectors and programs in its planning for development. Social Protection is an area of poverty reduction that looks at the interests of the most poor and vulnerable in the country. The Living Conditions Monitoring Survey which monitors the living situation of the population reveals that a total of 60 percent of Zambia’s population are poor. And of these, 42 percent are extremely poor. Extreme poverty means that their incomes cannot afford to deliver a meal on the table for that household. Looking at the national budget for 2013 delivered by Finance Minister, Alexander Chikwanda as the first PF budget has very telling allocations which reveal where Government interest is in regard to poverty reduction.

Despite Zambia experiencing fairly high rates of economic growth in the past ten years, it has among the highest rates of inequality with a gini coefficient as high as 54 percent. The Gini Index is an internationally defined standard measure of inequality. This level of inequality only means that the market driven strategies of development have not done much to reduce poverty and inequality among the Zambian population.

Against the backdrop of undistributed economic growth, changing fiscal conditions, inflationary and political pressure, finance minister Alexander Chikwanda presented the 2012-13Budget. Though he reduced spending by the executive, he increased funding for defence. The budget was a heart-break for social assistance but it did allow a marginal increase to social assistance programs. This analysis considers the Budget component on Social protection:

Why Invest in Social Protection?

Social protection can have a positive impact on growth in anumber of ways. It can finance investment in health and education, protect assets thathelp people earn an income, encourage risk taking, promote participation in the labourmarket, and ease the pain of economic transition. There are inevitably trade-offs. Social protection, in reducing povertyand inequality, can also lead to greater social unity and a more stable environment forindividuals to work, save and invest. Social protection is a potentially important part of a strategy toincrease sustainable, poverty-reducing gfrowth.

Social Protection Budget Analysis

The Social Protection Budget accounts for 2.77 percent of the entire National Budget for 2013. In terms of rank, Social Protection is 15th out of 22 line items in share of national budget. This reveals a drop in comparison to 2012 when Social Protection received the 12th highest allocation of the National Budget. This means that although the nominal value to Social Protection has increased in 2013, the share in relation to national budget has reduced.

2012-2013 Rank based table of government allocation by Function

2012 Expenditure by Function

% of Govt Budget

Allocation (K’ Billion)

 2013 Expenditure by Function

% of Govt Budget

Allocation (K’ Billion)

Grand Total

100.00

27,698.30

Grand Total

100.00

          32,212.20

General Public Services Executive

29.98

8,304.80

Economic Affairs

27.62

            8,897.00

Economic Affairs

29.32

8,120.00

General Public Services Executive

26.20

            8,441.10

General Government Services

26.72

7,400.50

General Government Services

18.83

            6,064.70

Education

17.51

4,850.50

Education

17.47

            5,626.80

Transport

16.82

4,658.80

Transport

13.63

            4,392.10

Health

9.31

2,579.90

Health

11.29

            3,638.10

Agriculture Forestry and Fishing

6.13

1,698.00

Defence

6.32

            2,035.60

Defence

5.95

1,648.50

Agriculture Forestry and Fishing

5.79

            1,865.40

Fuel and Energy

4.95

1,369.70

Fuel and Energy

4.49

            1,445.00

Public Order and Safety

3.67

1,017.40

Public Order and Safety

4.18

            1,347.00

Executive

3.09

856.1

Executive

3.17

            1,020.40

Social Protection

2.37

655.6

Housing and Community Amenities

3.13

            1,007.80

Legislation

2.15

594.7

General Economic, Commercial and labour

2.88

               926.80

Centralised Administrative Services

1.31

362.5

Social Protection

2.77

               892.20

Housing and Community Amenities

1.27

352.9

Legislation

2.00

               643.50

General Economic, Commercial and labour

0.96

266.1

Centralised Administrative Services

1.26

               405.70

Recreation, Culture and Religion

0.49

136.9

Recreation, Culture and Religion

0.78

               252.30

Tourism

0.19

52.6

Communications

0.38

               122.70

Communications

0.14

39

Mining

0.25

                 81.20

Environment Protection

0.11

31.8

Environment Protection

0.23

                 74.20

Mining

0.00

 

Tourism

0.20

                 63.80

 

Social Protection includes a number of programs aimed at reducing the effects of poverty suffered by the poorest in Zambia. The allocation towards social Protection in 2013 isK892.2 billion. This shows an increase by 236 billion from the K 655.6 that was allocated to Social Protectionin 2012. The total allocation to social protection in the 2013 budget is 36.1% higher than the previous budget. This is a commendable upward adjustment and reflects a level of commitment to the welfare of the poor and vulnerable in Zambia. However, an actual analysis of the way the figures are distributed within the allocation to Social protection is what constitutes the major concern for poverty reduction efforts.

Of the SP budget K616.90 is dedicated to Public Pension servicing. This represents a nominal increase of 142.70 billion ZMK in 2013. However, as a percentage share of the total Social Protection allocation, the share to Public Service pension has reduced from 72 percent in 2012 to 69% in 2013;representing a 3 percentage point drop in share of Public Service Pension servicing. This reduction in significance of pension servicing translates into an increased share for tax financed social assistance programs. However, the 3 %age point inrease is not sufficient to address the high incidence of poverty and vulnerability. By implication, still over 2/3 of the SP budget in 2013 goes to servicing pension arrears.

The allocation to Public Service Pension Fund (PSPF) in 2012 is 30.1% higher and the allocation to Social Cash Transfers has been increased by 51% from 55 billion in 2012 to 83.1 in 2013.  See table below

2012 Expenditure by Function

Allocation (K’ Billion)

% of Govt Budget

 2013 Expenditure by Function

Allocation (K’ Billion)

% change

% of Govt Budget

%age point increase as share of budget

%age point decrease as share of budget

Growth Social Protection

655.6

2.37

Social Protection

                          892.20

36.1%

2.77

0.40

 

           o/w Public Service Pension Fund

474.2

1.71

           o/w Public Service Pension Fund

                          616.90

30.1%

1.92

0.20

 

                   Social Cash Transfer

55

0.20

                   Social Cash Transfer

                            83.10

51.1%

0.26

0.06

 

Grand Total

27,698.30

100.00

Grand Total

                     32,212.20

16.3%

100.00

0.00

0.00

 

Of the balance of the allocation for SP, K83.1 billion, is allocated to Social Cash Transfers reflecting an increase of ZMK 28.1 Billion from 2012. The balance of 192.2 billion is distributed among several Social Assistance Programs including the Food Security Pack, Public Welfare Assistance Scheme, Street Children’s programs, women’s empowerment fund, School Feeding Program, etc. This represents a paltry 22% of the total social Protection budget spread across a number of important social assistance programs. This gives a reflection of token recognition of such programs.

What the amount means to Poverty Reduction

The SNDP outlines the target beneficiaries for tax financed social assistance programs as low capacity and incapacitated households. Incapacitated households generally lack the ability to move themselves out of poverty and are not reached by mainstream economic growth. The draft social protection strategy estimates that 10% of the Zambian population is incapacitated and 20% is vulnerable. With the current allocation to the social safety nets, if the 10% were reached universally, it implies that;

The population of incapacitated people is therefore: 1,304, 650.8. (ie. 10% of the Zambian population)The total budget allocation to social safety nets has this implication on the population of incapacitated people: ZMK 275,300,000,000.00/1, 304, 650.8= ZMK 211,014.32. This translates to a per capita benefit level ofZMK 211,014.32 for each incapacitated person in the nation on an annual basis. On a monthly basis this translates to ZMK 17,584.53 to a household. If on the other hand the 20% vulnerable were targeted this would cut the per capita benefit level by half. This level of low allocations to the extreme poor may be an important pointer to why the country is not recording a significant reduction in rural and extreme poverty levels as reflected in the Living Conditions Monitoring Survey of 2010.

Conclusion

The Budget as it stands bears the risk of leaving out the poorest and most marginalized of the Zambian population. With a share of 2.77 percent of the national budget addressing the needs of 42 percent of the population, poverty for them will not reduce significantly. This means that the 2013 budget has not made a significant dent in redistributive equity. While the slight increase in allocation to the Social Protection budget is commendable, the level of increase does not reflect true concern for the situation of the poor and vulnerable in our society. With this in mind, Government will struggle to achieve MDG 1 which intends to reduce extreme poverty and hunger by 2015. Poverty and hunger have a huge effect on the productivity and cognitive ability of a population and if this is not addressed, Government will continually have to invest in measures that are curative rather than preventive in addressing poverty.

 

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