• Tuesday, July 16, 2024
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BusinessDay

Design and implementation of Nigeria’s social security scheme

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One of the promises made by the All Progressives Congress (APC) party during the presidential campaigns is the implementation of a national social security scheme targeting the elderly in poor households and unemployed youths in the country. The recent reiterations in the media by Vice President Yemi Osinbajo and the information minister, Lai Mohammed, and the declaration on the floor of the National Assembly by the former Ekiti State governor and now minster for solid minerals, Kayode Fayemi, have added credibility to this promise.

The federal government has joined the league of progressive middle-income countries determined to improve their public systems through provision of social security schemes targeted at the most vulnerable groups in their population, including the elderly, unemployed youths, disabled, and widows. Social security is a basic human right, as enshrined in Articles 22 and 25 of the Universal Declaration of Human Rights in the United Nations General Assembly Resolution 217A (III) of 1948.

Nigeria is a signatory to these declarations and has the resources to implement a national social security scheme. However, successive administrations (military and civilian) have shown little political will and commitment, thereby depriving the citizenry of these rights. Even as Nigeria has recorded one of the highest growth rates in the developing world in recent years, averaging 7.4 percent yearly, the extent to which this economic performance reflects on ordinary citizens is far from obvious.

The national social security scheme in Nigeria is highly desirable. Longevity and improved maternal health have led to a rapid increase in the elderly population (65 years and above), as well as potentially productive youths (aged 20-35). Approximately 5 percent of the Nigerian population are elderly whilst over 40 percent are potentially productive youths. But households are becoming poorer largely due to high unemployment level, especially amongst the youths. The disabled and women face high inequality, whilst most of the widows face uncertain future. These are the most vulnerable groups in the population, as they are unable to cope with socioeconomic shocks when they occur.

For example, most of the elderly in poor households have no access to formal social security such as employment-related pensions, and they are unable to take advantage of income-generating opportunities even when they are available. In this situation, the provision of an old-age non-contributory cash transfer scheme provides an option to mitigate vulnerability to shocks, a way out of old-age poverty, and promoting pro-poor growth. Generally, a social security scheme should aim at smoothing consumption and providing reliable income to older people and short-term insurance against income shocks for those youths who could not find work, and other vulnerable groups in the population.

The above realities make a national social security scheme imperative and more urgent in Nigeria, but its effective design and implementation will be difficult. Even in advanced societies that are largely homogenous with well-established social security system, there are issues of coverage, targeting, determining eligibility, financing, duration, benefit level, conditionality, benefit administration, monitoring and evaluation, data collection, etc. In addition to these issues and in the Nigerian context, a social security scheme at the national level will generate ethnic, religious, political and even community and intra-household tensions. How the federal government addresses these issues is key to a successful and sustainable implementation of the scheme. It is unclear yet which ministry or government agency will implement the scheme.

For the proposed scheme to be sustainable and achieve the goals of poverty reduction and sustainable development in Nigeria, the federal government or the implementation agency should demonstrate clarity and commitment in the following related but important design and implementation areas:

Identifying core goals and objectives. One core objective is consumption smoothing through regular incomes. Another is redistribution, aimed at reducing poverty in the beneficiary households, and gender equity. The remaining design and implementation issues revolve around maintaining the core goals and objectives.

Population coverage. Should the scheme be restricted to the elderly, or include unemployed youths, or permanently disabled who cannot support themselves and have no other means of support? Should the scheme be implemented at the state or local government levels?

Eligibility. Given the goal of poverty reduction, should the scheme be universal or targeted based on some eligibility criteria and how should the eligibility be determined – on the basis of current income, household assets, or both?

Contributory or non-contributory. Elderly scheme is likely to be non-contributory. But should the youths who benefitted now make contributions when they found work in order to sustain the scheme into the future?

Conditional or unconditional. Should the elderly scheme be made conditional on children in beneficiary households attending school and have up-to-date immunisation? Should the youth scheme be conditional on looking for work and for how long?

Benefits level. The scheme will be budget-financed to guarantee subsistence, but is the N5,000 proposed sufficient to meet the basic needs of the targeted population or should the benefit be more ambitious? How will benefits be indexed for cost of living changes?

Complementary supply-side interventions. Lessons from experience suggest that social security schemes are more effective when complemented by supply-side interventions. For example, what is the usefulness of a youth unemployment income transfer without providing an environment conducive for employment-generating ventures?

The importance of these issues dictates the need for the federal government to take its time and not rush at implementing the scheme. In a highly heterogeneous society as Nigeria, it would be politically suicidal to implement a scheme that will create tensions in the polity. Experience from Latin America shows no easy ways to address these issues. The key problem, as in other African countries, relates to lack of experience, technical skills and ability, which constrain the capacity of government actors and operators to effectively design and implement social security schemes generally, and address issues prior to implementation.

Two key options are open to the federal government. First, there is a need to undertake national training workshops designed to strengthen the capacity of government actors and operators to effectively design and implement the scheme. The experience of the Ekiti scheme showed the importance of capacity building workshops for officials of the implementation agency. Secondly, the federal government should first implement a pilot scheme, possibly in selected states/local governments, before scaling up to the entire nation. The pilot scheme serves as an experimental phase of the scheme and provides an opportunity to examine the impact of the scheme on beneficiary outcomes. The findings from such a pilot exercise can be used to inform donor co-fund decisions. Also, the pilot scheme provides an avenue to identify design and implementation problems areas, which can then be addressed before scaling-up.

Finally, the international donor community has an important role to play in contributing to the development of a national social security scheme as a strategy for poverty reduction and sustainable development in Nigeria. No country in developing world single-handedly finances a social security scheme. Rather, international donors such as the International Labour Organisation, Help Age International, UNDP, UNICEF, World Bank, etc. provide financial and technical support. The key for attracting such donor support, however, is for the federal government to continue to show political will and commitment to the scheme as well as demonstrating good governance.

Damilola Olajide