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studies Bolivia, Botswana, Brazil, Costa Rica, Lesotho, Namibia, South Africa and Thailand. Broadly speaking, the case studies observe the following structure: profile and
background, description of the main elements of the social protection system, size and main characteristics of coverage, level of financing and expenditure, national strategies to
achieve fiscal space for investment in social protection, the sustainability of these strategies and their likely impact on poverty and welfare.
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2. Fiscal space and social protection:
Summary of lessons learnt
This section summarizes the main facts and lessons derived from the analysis of eight countries Bolivia, Botswana, Brazil, Costa Rica, Lesotho, Namibia, South Africa and
Thailand. The summary contains some good news for policymakers in other countries who are interested in implementing something similar in their countries.
At this point, attention can be drawn to two conclusions. The first is that the creation of sustained fiscal space for social protection is feasible and there are multiple options for
expanding this fiscal space. This is not a merely Utopian idea. As will be observed in the rest of this report, policymakers are not restricted to one or two options only; on the
contrary, there is a considerable range of options to explore. The necessary tools are at hands, and even the poorest countries considered in this study achieved extraordinary
results. On the other hand, their various experiences also show that there is no single recipe for raising the level of social protection financing. Although these countries have several
points in common, the decisions adopted by governments depend on the social, political, economic and cultural environment of each nation. In other words, the best strategy has a
strongly idiosyncratic component.
2.1. Information sources
Developing countries face difficulties in collecting uniform and statistically comparable information on social protection expenditure, largely because of the different definitions
and criteria used for measuring the expenditure components. Given these difficulties, this study endeavours to collect, systematize and analyse the data on social protection in order
to reduce the methodological problems associated with its definition and measurement. The information provided here is the exclusive responsibility of the authors.
In this report, the terminology “social security” and “social protection” are interchangeable. Accordingly, reference is made to “social protection” as having the
following aspects: 1 interchangeable with “social security” or 2 as “protection” provided by social security in case of social risks and needs.
Following a broad definition of social protection, the statistical definition used throughout this report to measure social protection expenditure is based on the functional definition of
the ILO Scholz, Cichon and Hagemejer, 2000, considering three categories: expenditure from contributory programmes social insurance, spending on non-contributory
programmes for social assistance or universal programmes, and public spending on health. By function, social protection expenditure cash benefits or benefits in-kind
includes health care, sickness, disability, survivors, employment injury, old-age, family and children, labour market programmes, housing, basic education primary school, cash
benefits, and benefits in-kind, and food and nutrition food aid, food stamps, food subsidies. In developing countries, it is customary to classify benefits according to local
needs and customs.
For example, the components of social protection expenditure in Brazil include spending on health and sanitation, which comprises primary care, hospital and out-patient care,
prophylactic and therapeutic support, health surveillance, epidemiological surveillance, food and nutrition and other public health functions. Spending on social security covers the
basic scheme Previdência Básica, the mandatory pension scheme Previdência do Regime Estatutário, the supplementary scheme Previdência Complementar and the
special scheme Previdência Especial. Spending on social assistance is in the form of cash benefits for the elderly, the disabled, children and adolescents including the popular Bolsa
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Família and for the community. In the case of South Africa, social protection expenditure comprises health expenditure, which covers outpatient services, hospital services, research
and development of health, public health services, outpatient care and other unspecified health expenditure, expenditure on contributory programmes, which includes social
insurance and unemployment protection, and expenditure on social assistance to protect the elderly, veterans, the disabled, to promote care and attention for dependents and to
provide child support, inter alia.
The information sources used in this report include both primary and secondary sources. In the particular case of information on social protection expenditure, primary sources were
used. For example, the data from Bolivia, Brazil, Costa Rica, Lesotho, Namibia and Thailand were extracted from the annual statistics published by the finance ministries of
each country. The information for South Africa comes from Statistics South Africa Stats SA, a government agency. For information on Botswana, the main source is the annual
reports presented by the Central Bank. Other information that does not refer to social protection, such as macroeconomic, fiscal and demographic statistics, was collected from
the databases and publications of institutions in each country finance ministries, central banks, social security institutions, statistical agencies and other public agencies, as well as
from the online databases of international organizations such as the World Health Organization WHO, International Labour Organization ILO, United Nations
Development Programme UNDP, Economic Commission for Latin America and the Caribbean ECLAC, World Bank WB, International Monetary Fund IMF,
Organization for Economic Cooperation and Development OECD, African Development Bank AFDB and Asian Development Bank ADB.
2.2. Brief overview of the countries
The eight case studies are a sample of highly heterogeneous countries. There are three Latin American countries, one Asian and four African countries, with populations ranging
from 2-5 million inhabitants Namibia, Lesotho, Botswana and Costa Rica, to around 10 million Bolivia to over 50 million South Africa, Thailand and Brazil.
The group of countries is also diverse in terms of socioeconomic conditions. Human development, measured by the Human Development Index, ranges from a low-ranked
country like Lesotho to the high-ranking Costa Rica see figure 1. Similarly, poverty rates move between low incidence rates in Thailand to high rates in Lesotho, while inequality as
measured by the Gini coefficient includes nations among the highest rating in the world Brazil, Botswana, Lesotho, Namibia and South Africa.
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Figure 1. Human Development Index, countries analyzed in the study
Source: UNDP 2009.
By size of the economy, Brazil ranks among the top 10 economies in the world and is the biggest economy in the group, followed by Thailand and South Africa see figure 2. In
terms of GDP per capita, the top four countries are Botswana, Brazil, Costa Rica and South Africa all with a GDP per capita above US10,000 in PPP terms; at the bottom of the
group we find poor economies like Lesotho US1,613 and Bolivia US4,426. Thus, the sample contains a group of economies at very different stages of economic development
and institutional maturity and with very different political models.
With respect to GDP growth, one can identify three groups of countries. A first group, to which Botswana, Costa Rica and Namibia belong, presented an average annual growth rate
above 4 per cent between 1995 and 2009. A second group comprises Bolivia, Lesotho, South Africa and Thailand, with average growth rates in the range of 3.0 to 3.9 per cent.
Brazil lagged behind the other countries with an average GDP growth rate of 2.9 per cent, partially attributable to low rates during the 1990s crisis.
Figure 2. GDP per capita 2009 and GDP growth by country 1995-2009, PPP terms
Source: World Bank 2010.
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Between 2005 and 2008, social spending averaged 21.3 per cent of GDP
1
while social protection including health expenditures averaged 14.6 per cent. Overall, two in every
three dollars spent in the social sector were allocated to social protection initiatives, a clear indication of the political will to support social protection initiatives. In comparison to
regional levels, three countries Brazil, Costa Rica and Lesotho show coefficients above the regional figure see figure 3. According to the ILO´s World Social Security Report
2010-2011, social security expenditures including health accounted for 9.7 per cent of GDP in Latin America, 8.7 per cent in sub-Saharan Africa and 12 per cent in Asia and the
Pacific ILO, 2010a, Table 8.1.
Figure 3. Social spending and social protection as a percentage of GDP 2005-2008
Source: Individual country data based on ministries of finance, housing, education of each country, central bank Botswana, national statistical offices, ECLAC 2010a, IMF 2010b, World Bank 2010 and WHO 2010b.
As a share of total public expenditure, social spending accounted for an average of 56.6 per cent of GDP. Costa Rica ranks at the top of the list of countries with roughly 72.1 per cent
of public spending going to social expenditure see figure 4. Botswana´s share of expenditure on the social sector 46.2 per cent ranks at the bottom of the list. About half
of social expenditure went to social protection initiatives, with great variations between Brazil 51,7 per cent and Botswana 15 per cent.
1
Weighted average by size of the economy. Simple average for this indicator was 17.9 per cent.
