Ethiopia’s scheme to help the poor is setting an example

TSIDE ZEWIDE has lived in the shadow of the national palace in Addis Ababa for more than 50 years. Since her husband died four years ago the 73-year-old has cared for three orphans, the grandchildren of her late sister, alone in a rundown government-owned shack. She has no pension and, until recently, had no income. “I relied on the kindness of my neighbours,” she sighs.

Last year Mrs Zewide’s fortunes changed. She and some 80 of her neighbours rise at dawn to sweep the streets of the Ethiopian capital for three hours a day. For this she is paid 1,200 Ethiopian birr ($44) a month, a fifth of which she is required to save. “It’s good for me psychologically,” she says. “It keeps me busy, and now at least I can tell people I have a job.” Her teammates nod in agreement.

They are participants in Ethiopia’s Urban Productive Safety Net Project, which was launched in 2017 and is among the largest social programmes in sub-Saharan Africa (outside South Africa) designed specifically for urban areas. About 400,000 poor Ethiopians in 11 cities are already enrolled. The government hopes it will eventually help 4.7m people in almost 1,000 towns. Beneficiaries are selected by a neighbourhood committee based on how poor and vulnerable they are. In addition to the paid work, they also receive training. Those who want to start their own businesses are given grants.

Safety-nets, in one form or another, have proliferated across Africa in recent years. Spending on them in sub-Saharan Africa now amounts to about 1.5% of GDP (see chart). In Tanzania 10% of the population is covered by its safety-net (at a cost of just 0.3% of GDP). Most schemes in Africa are focused on rural people and many are temporary, often implemented by donors in response to natural disasters or conflict. Few are designed to help households manage the private misfortunes—such as illness or the death of a family member—that can tip them into destitution. They also do a poor job of reducing the chronic unemployment that has taken root in many African cities.

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Ethiopia’s programme is a step towards building a national social-security system that will, in time, replace a hotch-potch of small ones. It builds on Ethiopia’s flagship rural safety-net, which is the largest of its kind on the continent and covers some 10m poor people in the countryside (out of a total population of about 102m). The government has committed $150m to fund the new scheme and the World Bank has stumped up the remaining $300m needed for the first five years. Ethiopia hopes that within ten years it will no longer need help financing the programme.

For years the Ethiopian government flinched at terms like “social protection”. Donors are hopeful that it now considers the safety-net a long-term policy rather than “a sticking plaster that won’t be necessary once industrialisation takes off”, says Tom Lavers of Manchester University. But, he notes, antipathy towards Western-style welfarism remains strong. The government flatly rejected the idea of no-strings cash handouts, which are popular among donors and development economists, partly because they are cheap to administer. “People can’t expect a free lunch,” says Belynshe Regassa, the head of Mrs Zewide’s local committee.

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Ethiopia’s rural scheme is widely regarded as a success. It has reduced rural poverty and helped the poor buy food during a severe drought in 2016 that might have led to famine. But towns and cities are a different challenge altogether. It can be hard to know which people are most in need. Applicants must have lived in the district for at least six months to be eligible, so transient urban folk may slip through the safety-net. Mrs Regassa says locals complained to her when they were not selected by the committee. Critics say supporters of the ruling party are more likely to get picked.

Despite such gripes, Ethiopia’s experience suggests that even poor countries can start extending safety-nets. But if Ethiopia is to achieve its goal of weaning the scheme off donor support, it may have to make cuts to wasteful subsidies, which would be politically painful.

The biggest challenge lies in the fact that even the broadest safety-nets in Africa only cover a small portion of the poor. Mrs Regassa, for example, is not eligible for help because she owns her own house. But as a single mother with four children she hopes the programme will one day include her, too.

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