The Institute of Policy Studies of Sri Lanka (IPS), in collaboration with the World Bank Resident Mission, organised a one day conference on ‘Protecting The Poor In Sri Lanka: The Role Of Safety Nets During Crises And Beyond’ on Wednesday at the Ceylon Continental Hotel.

The conference created a forum for discussion of various options available for the Government of Sri Lanka and other development practitioners to support poor households in Sri Lanka to cope with the unfolding impacts of the crisis. It was essentially an attempt to collate global experiences in using safety nets to fight the impacts of crises and to facilitate a discussion on what options make sense for Sri Lanka in its efforts to protect its poor.

Resource persons drawn from the public sector, international organisations, and academia and international experts connected via video conference, highlighted strategies and policies to overcome challenges faced by Sri Lanka. The Chief Guest at the occasion was Dr. Sarath Amunugama, Minister of Public Administration & Home Affairs and the Deputy Minister of Finance.

Dr. Saman Kelegama, Executive Director of the IPS in his introductory remarks stated that market driven economic growth contributes to poverty reduction in most countries, but markets alone cannot play the role of addressing poverty. Public policy plays an important role in providing the institutional foundations, within which markets operate, in providing public goods, and in correcting market failures.

In addition to laying the foundation for economic growth, policy can supplement the effects of growth on poverty reduction, and one of the instruments that governments can use to that end is direct redistribution of resources to poor households. It is in this context that the design and implementing of safety nets become important, he stated.

Dr. Kelegama went on to say that the adverse impact of the global financial crisis on the living standards in the developing world has given renewed emphasis to the importance of safety nets programmes. He stated that, "the poorest are particularly vulnerable to shocks however small in magnitude.’’ For example, the nature of the consumption distribution of Sri Lanka based on national level household data shows that a small shock can push a large number of the population that hovers around the poverty line into poverty, and those who are poor into extreme poverty.

An on-going study that explores the impact of natural disasters on the beneficiaries of the Samurdhi safety net programme show that debt levels increase, key productive assets are sold, children are taken out of school, and consumption patterns are changed by households, among other things, to mitigate the impacts of shocks. These adjustments are often difficult to reverse. Current responses that include the right policies have implications well beyond the crisis. Focus should be given to responses that have clear longer-term implications for economic development rather than those that revolve around short-term policies that are ‘populist’ in nature.

Dr. Kelegama also added that crises often create the political space for governments to either improve existing programmes or create new ones. If an adequate safety net exists then it should be supported for protecting the poor. Crises have also presented opportunities for setting up better information systems for monitoring progress and future preparedness. In Sri Lanka, new thinking is emerging on introducing a public work programme. This is because such a programme can be appropriate for the rehabilitation process of some IDPs – which has become a major problem today. What lessons can we learn for such an exercise from examples like the National Rural Employment Guarantee programme in India?

All these international experiences thus become relevant. There is no single recipe for an effective safety net. Policy makers need to have a clear understanding of the range of options available and choose responses that make the most sense given their country context.

Dr. Kelegama further stated that the conference was essentially an attempt to bring global experiences in using safety nets to fight the impacts of crises to facilitate a discussion on what options make sense for Sri Lanka in its efforts to protect its poor."

Dr. Sarath Amunugama, Chief Guest at the conference, pointed out that the poverty is a problem of resource allocation. He emphasized that managing an economy/resource allocation is a difficult task and it become more difficult in a time period when there is a crisis. The voice of the poor group should be taken into account in the process of investments in safety nets. However, Minister Amunugama recognized that this is the scenario which does not happen in Sri Lanka. Most of the poverty related policy forums are not represented by the poor community. As a result, poor people are provided what they actually do not want. The primary requirement of the poor is the accessibility to livelihood activities.

Dr. Amunugama highlighted that labour supply of the community is frozen as a result of safety nets which are not participatory development oriented. For example, he mentioned that currently Samurdhi programme, the government poverty alleviation programme does not have labour contribution component. His idea therefore, is that safety nets discourage people to sell their labour and earn money. He argued that governments have to choose between investing scarce resources on safety nets or livelihood generating programmes which generate longer term wealth.

The Minister made the case that the poor themselves would choose the latter. China, India and Vietnam have implemented these types of growth generating programmes and that is a key reason for the fast development of these countries. He expressed the view that an economically successful country should have a shrinking safety net system rather than the increasing safety net system. Poor people should be allowed to find their employment opportunities and get rid of their poverty.

Mr Shekhar Shah, Regional Economic Advisor, South Asia of the World Bank launched two books namely, "The Design and Implementation of Effective Safety Nets: For Protection & Promotion" and "Conditional Cash Transfers: Reducing Present and Future Poverty" in the inaugural session. He discussed safety nets and its lessons which Sri Lanka can adopt.

The deliberations at the conference were that the primary requirement of the poor was not handouts or safety nets but access to livelihoods so that the dilemma of resource utilization between the provision of handouts and investment for the creation of livelihoods.

Special references to crises such as chronic poverty vs. falling into poverty resulting from shocks were discussed. Therefore, promotion, reference to livelihoods and labour supply is more relevant to chronic poverty rather than poverty resulting from shocks. Safety nets providing temporary support in the event of negative shocks have limited impacts on labour supply and are in fact necessary to promote long term viability of livelihoods. There is however some interdependency between the two groups (chronic poor and the not necessarily poor populace adversely affected by shocks). First layer of people affected by financial crises are those who are relatively well off – i.e. those who are employed and send money back to rural homes – and who have now lost their jobs – then the fall of money transmission to the poorer households affects the chronic poor.

The Benazir Income Support Programme of Pakistan was presented by Mukhtar Ahmad, Director General (Operations), and Pooja Vasudeva Dutta, Economist of World Bank, New Delhi presented the case of the National Rural Employment Guarantee Scheme in India via video conferencing.

At the conference it was noted that whilst it is important to learn lessons from international best practises, it is equally important to draw home-grown success stories such as lessons from the positive cases of tsunami response where victims were given bank accounts and all cash that went to them was through the formal financial system.