In recent years, social protection has emerged as a key international development priority. It gained particular momentum from the recent global financial, energy and food crises, and the growing awareness of poor people’s vulnerability to climate-related disasters. Interest in social protection continues to expand as policymakers strive to secure hard-won human development gains and to tackle increasing levels of territorial and individual inequality, which often threaten social and political stability.
However, the discussion has focused less on how social protection can be best conceptualized and implemented in a decentralized context specifically by local governments. Electronic transfers to people in rural areas used to be unthinkable due to the non-presence of banks, challenges with electricity and the difficult accessibility. While these latest developments have created interesting opportunities for social transfer beneficiaries, financial inclusion is still not a reality in many countries.
UNCDF has specific expertise useful for advancing social protection and confronting some of the challenges mentioned above such as the adequate supply and financing of government services and the effective engagement of citizens in this process.
UNCDF is uniquely positioned to deal with social protection in a holistic manner, improving the supply side to service delivery (e.g. capital infrastructure investments, education, health, agriculture, water and sanitation), strengthening the demand side (e.g. citizen focus, demand for services, grievance mechanisms, rights-based approach), promoting financial inclusion and long term financial opportunities for the poor and vulnerable.
Social protection is not only about allowing households to cope with a crisis but also equipping them with capabilities to prevent future risks. Financial inclusion of social beneficiaries is one way of contributing to this objective. Innovative solutions from the financial sector ensure that the payment of social benefits can be done more cost-effectively for government as well as more convenient, secure and with additional advantages for the beneficiary. UNCDF has long experience in developing new financial products or ensuring that citizens are banked and become financially literate. UNCDF also hosts the secretariat of the Better than Cash Alliance which aims to facilitate the transition for governments from cash to electronic payments.
UNCDF, together with the World Bank, also initiated the Human Development Social Protection (HDSP) pilot in Nepal to improve the effectiveness, efficiency, responsiveness and accountability of governments, specifically local government, local institutions (in particular the education system) and citizens and to test modernizing and outsourcing of social payments to the private banking sector with a key agenda of financial inclusion leveraging the G2P payments.
“If social cash transfers are distributed through electronic banking including mobile money, then beneficiaries will receive payments more securely and cost-effectively and may also have access to additional financial services that may enable them to generate income, preserve and accumulate assets which can provide a path out of poverty.”