World Bank report: Egypt made remarkable progress to improve social protection of poor under Takaful and Karama Program

World Bank report: Egypt made remarkable progress to improve social protection of poor under Takaful and Karama Program
10 / 06 / 2023
بقلم Marwa Nassar - -

A new World Bank report, issued in June under the title of Built to Include: Reimagining Social Protection Systems in the Middle East and North Africa, said Egypt has made remarkable progress to improve social protection of the poor under Takaful and Karama Program (TKP) as it managed to expand its coverage for the poor from 21 percent to 50 percent in the period from 2016 to 2022.

In recognition of this success, the government of Egypt has expanded the program nationally. It is estimated that TKP is reaching up to 5 million households in 2023, making it the largest poverty-targeted conditional cash transfer in the Middle East and North Africa (MENA). TKP has a strong delivery system that is inclusive and efficient, often well beyond the program itself, the report said.

Beneficiaries are increasingly able to choose to receive their benefits digitally; all TKP households have been issued debit cards. The program also provides SIM cards to beneficiaries for communication and outreach.

Program applicants’ data are cross-checked against Egypt’s Unified National Registry, the largest social registry in MENA, covering the entire population. The program uses proxy means testing to prioritize support for the poorest households, and targeting accuracy is in line with the best-performing cash transfer programs around the world.

The TKP registry, which covers approximately 30 percent of the population, is being used to provide complementary human capital support to TKP beneficiaries, including helping people to combat illiteracy, facilitate access to reproductive health care and family planning services, and improve child nutrition and well-being and housing conditions.

The registry was also used to introduce a new economic inclusion program in 2019 called FORSA, which is being piloted in eight of 27 governorates and targets TKP beneficiaries who have been in the program for longer than 1 year (or in families close to the TKP eligibility line). The program offers two alternative packages; one for self-employment and one for wage employment. With the first package, beneficiaries receive a productive asset to start income-generating activities, along with financial literacy training and technical training on how to start the activity. With the second package, beneficiaries receive job matching and skills training for employment in the private sector.

The report also lauded Egypt’s securing of social pensions to the elderly poor under the program.

The report highlighted that only in Egypt and Jordan do cash transfer programs cover most of the poor, noting that “…most of the poor in developing MENA countries, except Jordan and Egypt, were not receiving cash transfers when the pandemic hit, which tended to amplify the initial poverty impact of COVID-19…”

Meanwhile, the report said that Middle East and North Africa (MENA) countries must mobilize additional tax revenue to finance social protection priorities in a progressive manner. Increasing the efficiency of social assistance and reforming subsidies might not generate enough savings to finance social protection priorities, including the expansion of cash transfers and opportunities for the poor, labor programs, and social insurance subsidies, and oil-importing developing MENA countries do not have the fiscal space to increase spending without raising additional revenue. There is room to collect more tax revenue in MENA countries in a progressive manner. MENA countries rely more on indirect taxes on consumption, which tend to be regressive, than on progressive direct taxes on income, profits, or property. In addition to increasing direct taxes, MENA countries can increase tax revenue in a progressive manner by removing tax exemptions and improving tax administration—Tunisia is a reform leader in this area. MENA governments should support active aging. Across MENA, people are living longer, healthier lives, but most workers retire too early, resulting in considerable loss of potential productivity gains and a significant drain on pension funds. MENA countries must extend working lives, which requires not only adjusting the retirement age to reflect gains in life expectancy and eliminating incentives to retire early, but also encouraging and supporting late retirement. Some MENA countries have been implementing parametric reforms that go in the right direction, including Egypt and Jordan.

The social protection response to COVID-19 was vigorous but limited by preexisting conditions. To varying degrees, all MENA countries responded to the COVID-19 crisis with social protection measures, especially income support. Most public assistance in Egypt, Jordan, Morocco, and Tunisia was well targeted to those most affected—the poorest segments of the population and informal workers—although most of them were left out, except in Jordan. The shock responsiveness of social protection systems—including the availability of UI and modern delivery systems with large social registries of households and digital payments— influenced the response. For the most part, and with notable exceptions such as Jordan, delivery systems across MENA had limited shock responsiveness. Pre-COVID-19 coverage of social protection programs also influenced the response; limited pre-pandemic coverage of income support and social insurance amplified the initial poverty impact of COVID-19 and made the response more costly, effectively limiting it.

Social protection instruments can be mapped along the welfare-work distribution of the population.

Social protection is designed to protect all people against poverty and other risks affecting their
well-being while ensuring financial responsibility and minimizing perverse incentives. This vision for social protection is fully aligned with the goal of universal social protection, which posits that everybody should have access to social protection.

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