Tanzania Mainland: Launch of the Social Protection Expenditure and Performance Review (SPER) and Social Budget (SB) Urszula Lonc, ILO Dar Es Salaam Dar Es Salaam, 24 th November 2008 ILO Global Campaign for Social Protection and Coverage for all: As a means to reducing poverty in Africa and Asia International Labour Office

Aim of the Global Campaign for Social Protection Dar Es Salaam, November 2008p. 2 The aim of this project is to identify the amount of fiscal space needed to implement a minimum social protection package in Tanzania Mainland. This aim is consistent with the objectives of the Tanzania National Strategy for Growth and Reduction of Poverty (MKUKUTA)

Key Findings for Tanzania Mainland Dar Es Salaam, November 2008p. 3 Demographic problems; Labour Market problems; Poverty levels are high; The provision of social protection is inadequate.

Demographics in Tanzania Dar Es Salaam, November 2008p. 4

Labour Market Dar Es Salaam, November 2008p. 5 The Tanzanian labour market is highly informal – 94 per cent of people work in the informal sector (ILFS 2005/2006); Almost one-third of children under 14 years were found to be employed in unpaid labour, and; Employment rates are very high for older people, indicating a lack of income security during retirement; Female participation rates are higher in rural areas than in urban areas.

Poverty Indicators Dar Es Salaam, November 2008p. 6 The latest poverty indicators available for Tanzania Mainland show that a significant proportion of the population are living below standard poverty thresholds:

Contributory Schemes Dar Es Salaam, November 2008p. 7 Social security (contributory) coverage is less than 1 per cent of the entire population, and about 6.5 per cent of the formal working population; All scheme benefit levels are inadequate: –Problems with early withdrawl of contributions on incidence of unemployment, sickness leave etc.

Non-Contributory Schemes Dar Es Salaam, November 2008p. 8 There is little information available to analyse non-contributory provision in Tanzania Mainland: –But we know enough to say the level of social assistance funding is low; Funding levels are estimated to be 1 per cent of GDP: –This is made up of 0.5 per cent GDP from the Government, and a further 0.5 per cent from NGOs;

Health Care Dar Es Salaam, November 2008p. 9 Coverage in the two social insurance funds offering health and medical coverage, the National Health Insurance Fund (NHIF) and the National Social Security Fund (NSSF), is low. Over the period , 45% of the national health system was donor funded: –indicating long-term uncertainty in the funding of health services.

Health Care – causes of death Dar Es Salaam, November 2008p. 10

Social Budget (1) Dar Es Salaam, November 2008p A status quo baseline in 2006/2007: Predominantly expenditure on education and public health

Social Budget (2) Dar Es Salaam, November 2008p A fifteen-year projection of the Social Budget:

Non-Contributory Social Assistance Dar Es Salaam, November 2008p. 13 As a starting point, future costs of three hypothetical benefits for three groups of beneficiaries were projected for the Social Budget: 1.A targeted social assistance scheme for vulnerable households, covering 10 per cent of all households; 2.A universal pension for all persons aged 60 and over; 3.A child benefit paid to i) the first child up to seven years, or ii) up to 14 years of age.

Non-Contributory Social Assistance Dar Es Salaam, November 2008p. 14 The results below illustrate that by allocating resources equivalent to just over 1.8 per cent of GDP, it would be possible to build the foundations of a social protection system in Tanzania Mainland in the long-run. Child Benefit up to 7 years Child Benefit up to 14 years

Key Findings - recap Dar Es Salaam, November 2008p. 15 Need for a labour market strategy: Tanzania Mainland has a highly informal labour market, and youth unemployment is high in urban areas; Social protection coverage is low, and there is a lack of overall coordination of the social protection system; The contributory schemes need reform - as there are significant pensions liabilities; Tanzania Mainland is highly dependent on donor funding, which might not be sustainable in the long-run.

The Way Forward (1) Dar Es Salaam, November 2008p. 16 There is scope to extend social protection coverage by using existing contributory and non- contributory schemes; A minimum package of universally acceptable benefits is affordable; A full costing of policy options for a social protection framework is required.

The Way Forward (2) Dar Es Salaam, November 2008p. 17 How can we increase fiscal space? There is a need to carefully align government and donor priorities given the level of planned increases in expenditure on health and education.

Way Forward (3) Dar Es Salaam, November 2008p. 18 The next stage of the project needs to address the composition of a comprehensive social protection funding system to build on the findings presented in this SPER and Social Budget for Tanzania Mainland.