The politics of social protection expenditure and financing in southern Africa

Abstract

Social protection is expanding in southern Africa, but consideration of its fiscal base is usually limited to affordability concerns. Little attention is paid to the different sources of revenue or how the interests of contributors to social protection may affect spending priorities. This article suggests there is a link between revenue source and social protection spending. Aid dependent countries' social protection policy is mostly determined by donors. The governments of countries that rely on natural resources or Southern African Customs Union revenue are relatively free to shape social protection policy. Only in countries that rely on domestic tax-based revenue, where the government must consider the interests of the taxpayer, is there something resembling a social contract for social protection, in which the citizens engage with their government through an exchange-based logic. This article concludes that a broad and diversified tax base is an important mechanism for creating a reciprocal relationship of this kind and thus increasing social spending.

Keywords:

• development aid
• fiscal policies
• resource rents
• social contract
• social protection
• taxation

Notes

²SACU is a revenue source specific to the southern African region, as is discussed further in Section 3.

³Even allowing for some uncertainty in calculations due to exchange rates and annual changes to pension rates, Botswana's pension rate is closer to those of Lesotho and Swaziland. Monthly pensions in US$ are as follows: Botswana: 25, Lesotho: 28, Namibia: 42, Mauritius: 90, South Africa: 141 (maximum), and Swaziland: 14 (author's calculations).

⁴South Africa has an unemployment insurance fund and Mauritius has recently introduced a workfare programme providing social security and training for the unemployed, but these two programmes are social insurance schemes and not government-funded social protection programmes, which are the focus here.