Free Access | 2024-04-12

Expanding fiscal space for social protection: The case for adolescent-oriented services.

Authors/Editors: Ibrahim Kasirye (PhD)

Abstract:

Uganda has been affected by the COVID-19 pandemic, and the pandemic is likely to continue to impact residents in the short- and medium-term, especially children. To contain the spread of the virus, the Government of Uganda (GoU) instituted several measures, including lockdowns and school closures—all of which severely disrupted livelihoods. Projections indicate that economic growth slowed down to 3.2 per cent in FY 2019/20 from 6.8 per cent in FY 2018/19—due to loss of employment opportunities, disruptions to supply chains, social distancing SOPs—all of which will affect the ability to raise domestic revenues in the medium term. The pandemic poses severe threats to inclusive development and has the potential risk of widening inequality. In response to these challenges, social protection (SP) programmes can provide additional support to mitigate the impact of COVID-19 on vulnerable groups, and the long-term recovery of the economy through investments in the well-being of young people. However, broadening the scope of SP coverage will require expanding the fiscal space given the constrained fiscal environment in Uganda. There are important reasons for making a case for increased social protection spending in Uganda. Like other countries in sub-Saharan Africa (SSA), Uganda has traditionally allocated relatively meagre funding to SP. On average, SSA countries allocate 0.6 per cent of GDP to SP, and this level of spending is less than a quarter of the average spending globally of 2.6 per cent of GDP (OXFAM International (2020).1 Based on UNDP’s 2019 Social Assistance in Africa database, Uganda spends only USD 8.3 per capita on cash transfers, making it one of the lowest in SSA (UNDP, 2019).2 Secondly, the response to the pandemic has partly demonstrated that the GoU can raise resources quickly when faced with a shock. The public debt as a share of GDP increased from 35.3 per cent in FY 2018/19 to 41 per cent in FY 2019/20 and is projected to peak at 49.9 per cent by June 2021 (Ministry of Finance Planning and Economic Development, 2021).3 However, the spending of additional resources was not focused on sectors that can significantly realise SP outcomes. Indeed, in response to the pandemic, SP expenditures were much lower than the fiscal stimulus packages allocated to other programmes in response to the pandemic. Estimates by the International Monetary Fund (IMF) show that the additional social protection spending (i.e., in the health sector, non-health sector) was much lower than the liquidity support (i.e. equity injections, loans, asset purchase or debt assumptions) offered to enterprises. Additional spending relating to social protection spending was 0.2 per cent of GDP in Uganda compared to liquidity support that amounted to 0.6 per cent of GDP (International Monetary Fund, 2020).4 Another reason for the need to prioritise SP spending in Uganda is that a significant income source—notably remittances—was lost due to the economic downturn because of the pandemic. Before the pandemic, Ugandans relied on remittances for livelihood support—the country received at least 4.1 per cent of its GDP as remittances in 2019. The decline in remittances is happening against a COVID-19 backdrop of a reduction in informal employment opportunities. According to the World Bank, due to both the health crisis and unemployment risks, remittances to sub-Sharan Africa (SSA) are projected to decline by 9 per cent in 2020 from US$ 48.8 Billion in 2019 to US$ 44 Billion in 2020 (World Bank, 2020).5 Worse still, remittances in SSA are projected to decline further in 2021 by another 6 per cent. The projected declines in remittances due to COVID-19 will affect food security and poverty. This brief focuses on fiscal space for adolescent-oriented services (notably in health and education) within the broader social protection framework. There are several reasons for focusing on adolescent services in Uganda, including their increasing needs, given the devastating effects of COVID-19. First, adolescents aged 10-19 years account for a substantial proportion of Uganda’s population—26 per cent (Uganda Bureau of Statistics, 2020)6 and have specific needs arising from their current demographic status. Second, adolescents face the highest risk of school dropout among schoolgoing children, and adolescents from poor households are significantly less likely to continue school. Nearly half of the children aged 18-19 years were out of school, even before the COVID-19 pandemic. Third, extended school closures due to the COVID-19 pandemic have significantly increased the risks faced by adolescents. The stay-at-home and school closure measures adopted exposed children to violence at home, while access to violence prevention and response services was severely disrupted (UNICEF, 2020).7 In addition, the continued school closures are likely to push so many children into early child labour activities. Fourth, Uganda has an extremely high rate of teenage pregnancies, which affect school continuation for girls. Finally, in the current government spending on education and learning, several specific needs for adolescent remain unfunded, e.g. inputs to address menstrual hygiene. Consequently, this policy brief examines the fiscal space for social protection—focusing on adolescent services.