The International Labour Organization has published the Social Protection Expenditure and Performance Review (SPER) and Social Budget (SB) report and Executive Summary which is an output of the first year of work of the ILO/DFID-funded project in Zambia: “ILO Global Campaign for Social Protection and Coverage for All as a Means to Reducing Poverty in Africa and Asia”.

 

 

The main finding is that neither existing contributory (social insurance) nor non-contributory (social assistance) social security provisions are adequate in terms of the numbers of the population covered, the scope of coverage and the adequacy of benefits/payments received. This is when half of the population is extremely poor, living below the poverty line, and almost two-thirds are living below the basic needs poverty line and thus moderately poor or worse. Preliminary analysis shows that Zambia could afford a basic package of social protection; universal old age pension, targeted cash transfers and a child benefit. In the longer run this package would cost not more than 1.5% of GDP and would build the foundations of a modern social protection system.

 

 

Other key findings of the SPER and SB can be summarised as follows:

 

 

The Labour Market

 

·        The labour market is highly informalised with eighty-eight (88) per cent of all of the employed working totally in the informal economy. Only 3 per cent of those employed worked in a fully formal environment;

 

·        The informal nature of the labour market presents a major challenge to the extension of social protection coverage.

 

 

Contributory schemes

 

Zambia’s contributory social security schemes are faced with a number of challenges, including:

 

·        Limited coverage and exclusion of many workers –about 79 per cent of all wage and salary earners are covered and there is poor compliance;

 

·        Working women are often excluded from coverage as they are predominantly in informal jobs;

 

·        The scope of benefits provided is very narrow and in many cases, the benefit levels are very inadequate to keep beneficiaries out of poverty;

 

·        Discrepancies exist in replacement rates between schemes for individuals with the same level of earnings and length of contribution. This is affected by lump sum payments.

 

 

Non-contributory schemes

 

·        Due to very limited available resources and weak institutional capacity, the extent of coverage of non-contributory schemes is very low, even if the existing programmes are intended to provide assistance to a wide range of poor and vulnerable groups.

 

·        The number of people actually reached depends on available and very scarce funding and is much  smaller than the number of those needing urgently the assistance;

 

·        Financial allocations to existing social assistance programmes are the range of 0.1-0.2 per cent of the Zambian national income;

 

·        In recent years, there has been a slight increase in social assistance expenditure mainly due to increased donor funding to pilot and other programmes whose sustainability has not been confirmed;

 

·        Social protection activities of government Ministries and institutions are not coordinated.

 

 

Health care

 

·        Zambia still has a limited health care infrastructure which is inequitably distributed across the country. Other constraints in achieving greater health care coverage result from the significantly reduced staffing levels;

 

·        Per capita expenditure  on health care has been on the increase but is heavily reliant on donor support;

 

·        The government waived the payment of user-fees in rural areas for primary care. This has led to a more than 50-per-cent increase in the utilisation of medical facilities in these areas;

 

·        HIV and AIDS represent the greatest share of Zambia’s current health burden; and its strong link to poverty makes it a major threat to the country’s development.

 

 

Current and future Social Budget of Zambia

 

The Social Budget part of the Report presents a picture of the resources allocated to different types of social security/social, looking at the main components of the Government’s budget and its social expenditure allocations and the aggregate Social Budget. Finally it discusses the future challenges to provision of social protection in Zambia.

 

 

Some of the key results of the Social Budget analysis are as follows:

 

·        Capital expenditure decreased by 4.3 per cent of GDP in 2007; tax revenue declined over the period 2000-2006 (except for 2007); 76 per cent of government investments are financed by foreign grants and there is a low level of capacity of some Ministries and government units at local government level in executing programmes. These and many other factors resulted in expenditure on social sectors falling below its target of 37.4 per cent to 30 per cent of realized total expenditures in 2007;

 

·        Only half of health expenditure is financed by the Central government with the remainder being donor-financed. In contrast, education is mainly financed by central Government. This is an important finding in relation to the sustainability of health care provision and its role in a minimum package of social protection benefits;

 

·        Donors play a significant role in financing social protection provision, either by grants or non-reimbursable aid and loans. For instance, grants represented 85.6 per cent of total external funding in 2006 with project support being the largest part of such funding;

 

·        Extending social protection coverage by social security institutions and protecting more people against various contingencies would allow the government to re-allocate resources among priority groups;

 

 

The report also provides preliminary cost simulations of three hypothetical cash social benefits which could be a starting point to build a modern basic social protection system in Zambia. The hypothetical package costed consists of:

 

- cash transfers targeted to the most vulnerable and poorest 10% of the Zambian population;

 

- universal basic minimum pension paid monthly to all elderly residents (for example aged 60 and above);

 

- child benefit paid to all mothers for the first child born until a child reaches certain age (for example school age).

 

 

The results should not be treated as policy recommendations, which should be developed as a result of a national debate involving all the stakeholders. These results illustrate however that by allocating resources equivalent in the longer run to not more than 1.5 per cent of GDP, Zambia would be able to build the foundations of a modern social protection system delivering basic security to those in need.

 

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