Beware of the Crocodile: Quantitative Evidence on How Universal Old Age Grants Distort the Social Assistance Systems of Low‐Income Countries

Abstract

This article compares two approaches to establishing or improving social assistance systems in low‐ and lower‐middle‐income countries. Taking Eswatini and Lesotho as examples of the mainstream approach, it provides quantitative evidence on the social protection outcomes of social assistance systems that are based on categorical programs and are dominated by universal Old Age Grants. Both countries fail to provide social assistance to large sections of the poorest and most vulnerable households. An alternative approach has been pursued in Malawi and in a number of other African countries like Zimbabwe and Ethiopia. Malawi's social support system adopts a systemic, need‐oriented, and inclusive approach with means‐tested programs tailored to the needs of the poorest and most vulnerable households. Such an approach does not focus on a single program but considers an ensemble of programs, which together ensure that the most pressing social needs are covered. This approach gives a fuller meaning to the human rights requisites of universalism by requiring that the overall arrangement of social protection in a country be universalistic, not just a single program.The comparison leads to conclusions with regard to how low‐income and lower‐middle‐income countries should design or redesign their social assistance systems. The design process should start with a quantitative poverty and vulnerability assessment, leading to a detailed identification of the social assistance needs of different categories of poor and vulnerable households. The design should further be based on an assessment of to what extent the identified social assistance needs are covered by existing programs. The comparison of social assistance needs with the coverage of those needs by existing programs leads to the identification of social protection gaps. The results of the gap analysis provide the base for social assistance policy decisions and priority setting. When planning how best to close the prioritized social assistance gaps within the financial space available, different program options have to be assessed with regard to their impact on the performance of the social assistance system as a whole. The guiding principle should be to harmonize the system in such a way that the combined outcome of system components (programs) achieves a maximal welfare impact. This means shifting from “program universalism” to “systemic universalism,” to ensure that social assistance systems cover all citizens in need while giving priority to cover the neediest.