128
Inclusion and Resilience: The Way Forward for Social Safety Nets in the Middle East and North Africa
fits to their poor and vulnerable populations (see figure 3A.1, panel c). West Bank and Gaza appears above the trend line, most likely because cash assistance is provided by international donors, such as the UN and international NGOs. On the other hand, Egypt and the Republic of Yemen (and, to a lesser extent, Iraq) are below the trend line, implying that compared with their development peers, SSN transfers in these countries are much more modest. Figure 3.13 compares the generosity of some SSN programs in the Middle East and North Africa with similar programs in Europe and Central Asia. Most Middle Eastern and North African programs lag behind the comparator programs in providing sufficient income support for the poorest quintile. West Bank and Gaza and Jordan’s NAF are regional leaders in terms of benefit generosity. Setting the benefit size for an SSN program is an important but difficult policy decision. On the one hand, a robust safety net should deliver adequate consumption protection for the most vulnerable members of a society: those who cannot provide for themselves due to age or disability and those who need temporary assistance to rebound from an economic or health shock. On the other hand, overly generous benefits may discourage working-age, able-bodied adults from participating in the labor force and instead encourage them to depend on the SSNs provided by the government. Based on the international comparisons presented above, the benefit generosity of SSNs in the Middle East and North Africa can be increased without triggering work disincentives.
The Role of Zakat as Informal Safety Net In the Middle East and North Africa, a significant complement in all countries to the formal or public SSN system is the privately provided Zakat, which is often perceived as the largest transfer system to the poor and vulnerable. Zakat consists of informal social transfer from better-off to poorer households. One of the Five Pillars of Islam, it is a system ingrained in Islamic society whereby it is a duty to give part of one’s income and assets to help the poor and needy. The amount is computed using a formula that differs by type of asset, which may include gold, land, livestock, minerals, and cash savings. Interpretation of this formula varies from country to country. Typically, Zakat targets categories of beneficiaries that the Qur’an defines as being especially in need. In some countries, the collection and distribution is institutionalized by the government in the form of an obligatory tax, but in others, such as the Republic of Yemen, it remains largely a private affair—being not an obligatory tax but a transfer whose amount is calculated by the giving household and that is mostly either distributed
The Current State of Social Safety Nets in the Middle East and North Africa
129
FIGURE 3.13
Benefit Generosity for the Bottom Quintile of Selected Nonsubsidy SSN Programs, Middle East and North Africa Compared with Europe and Central Asia Romania GMI Jordan Zakat Yemen, Rep. SWF Latvia GMI + dwelling Egypt, Arab Rep. Sadat Pension Kyrgyz Rep. UMB Iraq SSN Poland SA benefits Egypt, Arab Rep. Zakat Russian Federation CA Kazakhstan TSA Albania NE Ukraine XP program West Bank and Gaza MOSA West Bank and Gaza UN Bulgaria GMI West Bank and Gaza Non-MOSA Macedonia, FYR, SFA Jordan NAF Hungary Regular SA Bosnia and Herzegovina CSW Lithuania Social Benefit Armenia FB Prog Serbia MOP Croatia S. Allowance Montenegro FMS/MOP Estonia MT Benefits Kosovo SA Georgia TSA 0
10
20 30 40 50 Benefits as % of welfare of bottom quintile
Middle East and North Africa countries
60
Comparator countries
Sources: Middle East and North Africa data from authors’ calculations based on household surveys; other data from World Bank’s ECA (Europe and Central Asia) Household Survey Database. Note: CA = Child Allowance; CSW = Centres for Social Work; FB = Family Benefit; FMS = Family Material Support; GMI = Guaranteed Minimum Income; MOP = Material Support to Families (Materijalno obezbeđenje porodice); MOSA = Ministry of Social Affairs; NAF = National Aid Fund; NE = Economic Assistance (Ndihma Ekonomike); SA = Social Assistance; SFA = Social Financial Assistance; SSN = social safety net; SWF = Social Welfare Fund; TSA = Targeted Social Assistance; UMB = United Monthly Benefit; UN = United Nations; XP = Extremely Poor.
directly to the chosen beneficiary or delivered for distribution to the mosque or sherif (neighborhood leader). (Delivery to the government or an NGO is less frequent.) Zakat is normally given in the form of cash, once or twice a year (during Ramadan and Eid). According to the United Nations Development Programme’s Arab Human Development Report