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Lea Bou Khater , researcher at the Consultation and Research Institute and lecturer in development studies at the American University of Beirut and the Lebanese American University.


March 2020
Poverty Targeting is not the Solution for Much Needed Social Policy

In its attempt to mollify the socio-economic repercussions of COVID-19, the Lebanese government announced this week the distribution of food and hygiene packages to household identified by the National Poverty Targeting Program (NPTP). NPTP is the only anti-poverty and cash transfer program in Lebanon since 2012. It started with an initial budget of $28 million to be distributed in benefits, only to be increased throughout the years. With the outbreak of the economic and financial crisis in October 2019 and the anticipated soaring poverty rates in 2020, the government decided to scale up the NPTP to $452 million which will be fully funded by a World Bank loan.

The NPTP has suddenly gained additional relevance and is at the forefront more than ever due to the COVID-19 outbreak. Since February 2020, Lebanon has been grappling with containing the virus and has gradually moved toward a national lockdown on 13 March, causing many people to lose their daily income. In addition to its impact on an already ill-structured social protection policy and a starved healthcare system, the “self-imposed lockdown” has added strain on vulnerable groups and those at higher risks of falling under poverty lines. Along with the bearing of illegal capital control, salary cuts, and layoffs, the lockdown deeply threatens the livelihoods of informal workers, daily wage earners, salaried employees, self-employed workers, and their dependents.

Despite policy solutions that begin to be voiced such as immediate wage compensation to those who are affected the most, NPTP remains the only governmental anti-poverty response, in a country marred by soaring inequality. At the risk of sounding trite, a short history of poverty targeting is due: Does inequality matter if poverty is decreasing?

Targeted cash transfers have long been described as magic bullets for development and are considered to be effective because they relieve immediate deprivation. They are also relatively cheap to run compared to other social protection schemes. Examination of the NPTP’s features, impact, and limitations show that it provides substantial support to the poorest, but it also shows that it can offer only limited long-term gains. The limitations of the NPTP are rooted in the social and political development in Lebanon, but also in the neoliberal underpinnings of cash transfers. More significant outcomes require the expansion toward the universalization of social provision in Lebanon.

Poverty, Inequality, and Social Policy in Lebanon

Poverty in Lebanon is persistent. While the country lacks reliable and consistent data, there have been several attempts to measure it since 1960. The first poverty study commissioned by President Fouad Chehab to the French NGO IRFED[1] in 1961 revealed that 50% of the population had income below the poverty line, whereby prevalent poverty pockets were located in North Lebanon and the Bekaa. More than 40 years later, a UNDP study revealed the same stark poverty pockets in the Bekaa and the North, and a total poverty rate of 28.5% in 2005.[2] The 2011-2012 household budget survey by the Central Administration of Statistics (CAS) indicated that 27% of the population was poor and, as shown in previous studies, poverty rates in North Lebanon and the Bekaa were higher than in Beirut and Mount Lebanon.

The primary purpose of the Lebanese social protection policies has not been initiated to eliminate extreme poverty, reduce inequality, or expand citizenship. Historically, social policy in Lebanon contributed to a dynamic of exclusion in which the upper and middle classes were well served by a subsidized private sector. Relatively privileged workers, compared to other workers such as informal ones, were unequally and precariously provided for by the state through health insurance, family allocations, and end-of-service indemnities, albeit provided in limited quantity and quality. In addition, unemployment benefits and insurance for disability and work accidents are currently non-existent. Most informal workers such as seasonal laborers, construction and agricultural workers, migrant and domestic workers, as well as the self-employed, unemployed, and retirees remain unprotected. Today, 44% of residents do not benefit from any form of social protection according to CAS’s 2018-2019 Labor Survey.

This kind of a situation leads to an increased reliance on services provided by sectarian organizations, thereby weakening even further the ties between citizens and the state. Through these targeting schemes, the pervasiveness of traditional sectarian patron-client relations, and most importantly the durability of poverty are maintained. In fact, as explained by David Mosse, “the social processes that make poverty and inequality durable include boundary marking and exclusion which give particular importance to the effects of identity and social categorization.”[3]

Therefore in lieu of universal schemes financed by progressive taxation, the neoliberal “minimal state” promoted individual provision funded by private insurance and supplemented by ill-structured and modest schemes, including poverty targeting.  

The Rise of the National Poverty Targeting Plan

In fact, as part of its commitments under the 2007 Paris III donor conference to reduce extreme poverty, the Lebanese government has developed a poverty targeting mechanism, implemented by the Ministry of Social Affairs (MoSA) with the support of a World Bank program, to deliver direct cash assistance as well as other services or exemptions to qualifying extremely poor households.
The NPTP was launched in 2012 whereby a nationwide campaign invited poor households to apply to the program. Their eligibility was calculated via proxy means testing which consists of a metric to rank households based on a set of measurable characteristics reported by households and observed by social workers.

Today the NPTP database holds 150,000 households who applied, of which 43,000 were selected to benefit from a limited number of social safety services: i) E-cards to buy food offered to only 15,000 households as of February 2020 following the recent scale up of the program; ii) exemption of payment for health services provided by the Ministry of Public Health; and iii) transfers to cover registration in public schools. At first glance, the basket of benefits seems very limited: Some people who are classified as poor might not actually receive help because of the types of benefits.

Limitations of NPTP

Lebanon’s NPTP has various limitations mitigating its impact on the population in need. First, targeting programs are designed to be cheap. In general, even the largest program rarely cost 0.5% of GDP, knowing that the new wave of the NPTP will cost around 1% of GDP. Like most targeting schemes, the NPTP budget cannot support economic growth, transform the life chances of the poor, increase their assets, or enhance their income-generating capacity.

Second, the targeting process gauges two errors: The exclusion of qualifying individuals and the inclusion of the non-poor. As an example, old-aged people who live alone and with no school-aged children may have less chance to be within the beneficiaries’ range depending on the selection formula and weights. Conversely, the system might include people who are less needy than others, unless the targeting program is able to verify the collected data and to check whether applicants benefit from other social programs.  

Third, the NPTP seems to lack an exit strategy that allows the graduation of beneficiaries after a certain period of time. Obviously, any target program cannot sustainably retain its beneficiaries and accumulate new ones, knowing that funds are limited.

Fourth, the operational costs of poverty targeting are usually high due to the features of plans in terms of targeting, selection, distribution of benefits, management, and evaluation. The program is marred by the excessive hiring of social workers.

Finally, targeting undermines social cohesion. It bypasses organizations with a legitimate sake in social provision such as trade unions, community associations, and research institutions, and validates assumed limitations of welfare spending. Embedded in a sectarian system, targeting may have to follow sectarian underpinnings in selection and distribution. It may also alienate the non-poor who contribute to the program through taxation but have no say about how their money is spent.

Moving Forward

Poverty cannot be defined by the inability to reach a certain level of income, implying that it can be eliminated by targeting schemes. The latter can only address the symptoms of poverty and inequality while leaving untouched the social and economic structures that reproduce them.

In his study of cash transfers in Brazil and the famous Bolsa Familia, the government's social welfare program, Alfredo Saad-Filho explains that poverty eradication requires “labour market improvements, the reduction of elite control of productive assets and the universal free provision of basic services including health, education, public transport and water sanitation. These can be supported but not replaced by poverty targeting, cash transfers, and food vouchers.” In fact, the Brazilian experience showed that cash transfers explained the decline of one-third of the Gini coefficient—a statistical measure that gauges economic inequality—while job growth, formalization of employment, and higher minimum wages accounted for two-third.[4]

Finally, the biggest constraint to universalization and pro-poor policies tend to be the lack of political will to confront neoliberal ideas and the entrenched interest of ruling elites and donors, instead of embarking in structural changes. Even if poverty decreases in Lebanon, addressing the structural reasons behind durable inequality remains the principal approach against pauperism.
 


[1] Institut international de recherche et de formation éducation et développement
[2] UNDP. 2008. ‘Poverty, Growth, and Income Distribution in Lebanon.’
[3] Mosse, D. 2010. ‘A Relational Approach to Durable Poverty, Inequality, and Power.’ Journal of Development Studies, Volume 46, Issue 7.
[4] Saad-Filho, A. ‘The Bolsa Familia Programme in Brazil.’ Development and Change 46(6): 1227-1252.








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