The global economic crisis, public budgets and child-sensitive social protection in Sub-Saharan Africa Andy Sumner a.sum

1. The global economic crisis, public budgets and child-sensitive social protection in Sub-Saharan Africa Andy Sumner a.sumner@ids.ac.uk

2. Contents • The crisis so far • The crisis in SSA so far and public budgets • Policy responses, social protection, and policy narratives looking ahead • Conclusions

3. 1. The crisis so far • What’s different? • Crisis origins in the industrialized countries; speed of global transmission; the size of the shock; compound nature (following fuel and food shocks) and long run impacts for children. • What happened and what didn’t? • Growth slowdown but few outright recessions; falls in exports; FDI; remittances but very variable; aid budgets under pressure but no large fall (yet?) • A new opportunity to promote social protection (SP)? • SP in East Asia a result of last crisis; strong evidence that SP is a cost-effective use of public budgets; many pilots in SSA and new resources - VFF, RSRP but will future fiscal concerns squeeze SP? • What does this all mean for child poverty?

4. Child poverty estimates of the current crisis Countries, people, US$ or child mortality: • 43 or 33 countries; • 46, 53, 90, 108 million new poor; • US$46 per poor African; • 200-400,000 more infant deaths. • Depends on growth/poverty assumptions (remember debates on poverty elasticities?) and whose growth estimates (IMF; World Bank; UN-DESA and revisions);

5. How does a crisis transmit to child poverty?

9. Child poverty impacts of previous crisis • MDG 1a Consumption poverty • unambiguous increases • MDG 1b and 2 Child nutrition/health/schooling • Generally worsen but not always – policy can prevent this. • Impacts and equity • Unequal impacts for children and by gender (HH coping mechanisms); • Other… • Strong evidence of psychological distress and mental health problems (Das, 2008); elevated levels of community and intra-household conflict during and post-crisis (Friedman and Thomas, 2007; World Bank, 2008a); • But…. • Evidence is generally from middle income Asia and Latin America; current crisis is different – compound nature after food/fuel shocks; More thinking on long-run capabilities and inter-generational aspects?

10. Hossain et al., (2009) study in 5 countries: • Food: higher proportion of income; less diverse/lower nutritional value, less, women eating least/last; Range of health impacts reported; School absenteeism and dropout, child labour; Intra-household tensions, abandonment of children and elderly and signs of rising social tension; Criminalisation of youth and rising crime. • People’s own crisis indicators? How about children’s? • Changes in prices, reduction in the amount of paid workers; number of vacant dormitories rented for export workers, reduced working hours, termination/broken contracts, lay-offs, returning migration. Evidence on child poverty impacts of the current crisis

11. 2. The crisis in SSA and public budgets Surely low income, subsistence and/or agricultural economies aren’t linked to complex global financial markets? • % banking sector assets held by foreign banks: > 50% = e.g. Mozambique (100%), Uganda (80%), Zambia (77%), Tanzania (66%) Ghana (65%). • Remittances as % GDP: > 2% = e.g. Sierra Leone (9%), Kenya (7%), Nigeria (6%), Uganda (4%); Ethiopia (2%). • Primary commodities as % exports: >80% = e.g. Ethiopia, Ghana, Kenya, Malawi Mozambique, Nigeria, Rwanda, Sierra Leone, Sudan,Tanzania, Uganda, Zambia. • Many countries have multiple economic vulnerabilities

12. Data so far on SSA and outlook • Export earnings have not fallen radically but haven’t grown at pre-crisis rates (exception is oil exporters have big falls) • Large falls in FDI and remittances in many countries but not all; • Significant deceleration in GDP per capita growth rates; • Pressure on public expenditure in some countries immediately, and most in next 2 years. Most striking trend is debt servicing upward trend - large annual increases in debt servicing;

16. 3. Policy responses, social protection, and policy narratives looking ahead • Context • Some expansionary fiscal policy e.g. Zambia; Tanzania; Mozambique; but exception – generally fiscal tightening and likely to continue; (aid under pressure too). • Policy narratives • Shifting ‘conventional wisdom’ on public expenditure towards social protection and ‘graduation’; plenty of evidence that SP reduces child poverty; more pilots emerging in SSA; more resources, more donor support, more domestic support? • Looking ahead • Taking human development to the next dimension(s) - what might ‘human wellbeing’ offer SP?

17. From human development to ‘human wellbeing’? What a child has; What a child can do with what they have; How a child thinks about what they have and can do.

18. ‘Human wellbeing’ and the causes of child poverty

19. ‘Human wellbeing’ and policy responses

20. How might ‘human wellbeing’ help with SP?

21. How might ‘human wellbeing’ help with SP?

22. 4. Conclusions • Poverty impacts of previous crises significant for child poverty; Early evidence for current crisis supports this; • SSA connected to crisis but highly nuanced impacts - some countries very badly hit others less so; • Fiscal/aid landscape shifting; thinking about a new policy narrative - from human development to ‘human wellbeing’ - implications for child poverty analysis, inter-generational transmission, policy responses and child-sensitive SP?