Social fund
Encyclopedia
A social fund is an institution, typically in a developing country
, that provides financing (usually grants) for small-scale public investments targeted at meeting the needs of poor and vulnerable communities. Social Funds also aim at contributing to social capital
and development at the local level. In many cases they serve as innovators and demonstrators of new methods of decentralized participatory decision-making, management, and accountability that may be adopted for broader application by public sector organizations.
. However, a Social Fund also exists in Romania
, a country that has recently joined the EU, as well as in many other Eastern European countries. Probably the largest Social Fund is the Pakistan Poverty Alleviation Fund (PPAF) with a resource base of US$ 500 million. Social Funds have channeled close to US$ 5 billion of World Bank
funding in Africa alone between 1999 and 2005 and have channeled more than ten billion dollars from all donors and governments' own resources over the past 20 years.
. During the 1990s Social Funds spread quickly throughout Latin America and Africa with the intellectual and financial backing of the World Bank and other donors.
The first generation social funds were created to serve as short-term safety nets to soften the impact of structural adjustment
policies on the poor, which was mainly achieved by providing temporary employment. Second generation social funds have adopted more explicit institutional strategies aimed at empowerment and capacity building of communities as well as local governments in the context of decentralization
.
Social Funds were created as temporary agencies that would be phased out once capacity of line agencies had been strengthened. Some Social Funds, such as in Ethiopia
, are now in the process of being phased out, and others, such as in Honduras
, are supposed to be closed down by law a few years from now. However, many Social Funds may well remain permanent institutions fulfilling important functions that line agencies may not be well set up to perform.
and to introduce innovations. Social Funds have pioneered community-driven development (CDD), whereby community-based organizations (typically representing a few hundred people or less, often in rural areas) administrate funds themselves and choose where to invest them, thus increasing transparency and accountability for the use of funds. This approach also builds the self-confidence and capacity of local communities. It also helps projects to better meet local needs.
or the Social Fund (UK).
Developing country
A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
, that provides financing (usually grants) for small-scale public investments targeted at meeting the needs of poor and vulnerable communities. Social Funds also aim at contributing to social capital
Social capital
Social capital is a sociological concept, which refers to connections within and between social networks. The concept of social capital highlights the value of social relations and the role of cooperation and confidence to get collective or economic results. The term social capital is frequently...
and development at the local level. In many cases they serve as innovators and demonstrators of new methods of decentralized participatory decision-making, management, and accountability that may be adopted for broader application by public sector organizations.
Prevalence of Social Funds
In 2007 Social Funds existed in more than 45 countries, predominantly in poorer and smaller developing countries that receive significant official development assistanceOfficial development assistance
Official development assistance is a term compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development to measure aid. The DAC first compiled the term in 1969. It is widely used by academics and journalists as a convenient indicator of...
. However, a Social Fund also exists in Romania
Romania
Romania is a country located at the crossroads of Central and Southeastern Europe, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea...
, a country that has recently joined the EU, as well as in many other Eastern European countries. Probably the largest Social Fund is the Pakistan Poverty Alleviation Fund (PPAF) with a resource base of US$ 500 million. Social Funds have channeled close to US$ 5 billion of World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
funding in Africa alone between 1999 and 2005 and have channeled more than ten billion dollars from all donors and governments' own resources over the past 20 years.
History and evolution
The first Social Fund was created in 1987 in BoliviaBolivia
Bolivia officially known as Plurinational State of Bolivia , is a landlocked country in central South America. It is the poorest country in South America...
. During the 1990s Social Funds spread quickly throughout Latin America and Africa with the intellectual and financial backing of the World Bank and other donors.
The first generation social funds were created to serve as short-term safety nets to soften the impact of structural adjustment
Structural adjustment
Structural adjustments are the policies implemented by the International Monetary Fund and the World Bank in developing countries. These policy changes are conditions for getting new loans from the International Monetary Fund or World Bank, or for obtaining lower interest rates on existing loans...
policies on the poor, which was mainly achieved by providing temporary employment. Second generation social funds have adopted more explicit institutional strategies aimed at empowerment and capacity building of communities as well as local governments in the context of decentralization
Decentralization
__FORCETOC__Decentralization or decentralisation is the process of dispersing decision-making governance closer to the people and/or citizens. It includes the dispersal of administration or governance in sectors or areas like engineering, management science, political science, political economy,...
.
Social Funds were created as temporary agencies that would be phased out once capacity of line agencies had been strengthened. Some Social Funds, such as in Ethiopia
Ethiopia
Ethiopia , officially known as the Federal Democratic Republic of Ethiopia, is a country located in the Horn of Africa. It is the second-most populous nation in Africa, with over 82 million inhabitants, and the tenth-largest by area, occupying 1,100,000 km2...
, are now in the process of being phased out, and others, such as in Honduras
Honduras
Honduras is a republic in Central America. It was previously known as Spanish Honduras to differentiate it from British Honduras, which became the modern-day state of Belize...
, are supposed to be closed down by law a few years from now. However, many Social Funds may well remain permanent institutions fulfilling important functions that line agencies may not be well set up to perform.
Benefits
Some of the benefits of Social Funds have been their ability to better reach poor constituencies, to reduce corruptionPolitical corruption
Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by...
and to introduce innovations. Social Funds have pioneered community-driven development (CDD), whereby community-based organizations (typically representing a few hundred people or less, often in rural areas) administrate funds themselves and choose where to invest them, thus increasing transparency and accountability for the use of funds. This approach also builds the self-confidence and capacity of local communities. It also helps projects to better meet local needs.
Criticism
Social Funds have been criticized for displacing or weakening existing institutions such as sectoral ministries and departments, particularly since they often - but not always - offer salaries that are significantly higher that in the public sector. Another criticism is that there has been no exit strategy to phase out Social Funds, although they were intended to be temporary institutions.Evaluation
In 2002 the World Bank carried out the first systematic, cross-country evaluation of Social Funds. The evaluation covered social funds in Armenia, Bolivia, Honduras, Nicaragua, Peru, and Zambia. Investments had been concentrated in education, health, water and sanitation sub-projects. Each evaluation reviewed the social fund’s poverty targeting, sustainability, welfare impacts, and costs. One of the evaluation's main conclusions was that the Social Funds evaluated were indeed effective at reaching the poor and extremely poor communities and households, something that had been disputed given allegedly limited capabilities of poor communities to manage funds and execute sub-projects.Africa South of the Sahara
There are close to twenty social funds in Africa, including in- Angola (FAS),
- Burundi - Fonds social de développement (FSD),
- Benin - Fonds social de développement (FSD),
- Eritrea,
- Ethiopia - Ethiopian Social Rehabilitation Fund (ESRF),
- Lesotho,
- Madagascar - Fonds d’Intervention pour le Développement (FID),
- Mali - Fonds de solidarité nationale (FSN),
- Malawi - Malawi Social Action Fund (MASAF),
- Senegal - Fonds Social de Développement (FSD),
- Sierra Leone- National Commission for Social Action (NaCSA),
- Tanzania - Tanzania Social Action Fund. (TASAF),
- Zambia - Zambia Social Investment Fund (Zamsif), and
- Zimbabwe - Social Development Fund (SDF).
Asia
- ArmeniaArmeniaArmenia , officially the Republic of Armenia , is a landlocked mountainous country in the Caucasus region of Eurasia...
- Armenian Social Investment Fund, - CambodiaCambodiaCambodia , officially known as the Kingdom of Cambodia, is a country located in the southern portion of the Indochina Peninsula in Southeast Asia...
, - Kyrgyzstan,
- LaosLaosLaos Lao: ສາທາລະນະລັດ ປະຊາທິປະໄຕ ປະຊາຊົນລາວ Sathalanalat Paxathipatai Paxaxon Lao, officially the Lao People's Democratic Republic, is a landlocked country in Southeast Asia, bordered by Burma and China to the northwest, Vietnam to the east, Cambodia to the south and Thailand to the west...
, - PakistanPakistanPakistan , officially the Islamic Republic of Pakistan is a sovereign state in South Asia. It has a coastline along the Arabian Sea and the Gulf of Oman in the south and is bordered by Afghanistan and Iran in the west, India in the east and China in the far northeast. In the north, Tajikistan...
- Pakistan Poverty Alleviation Fund (PPAF), - PhilippinesPhilippinesThe Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
, and - TajikistanTajikistanTajikistan , officially the Republic of Tajikistan , is a mountainous landlocked country in Central Asia. Afghanistan borders it to the south, Uzbekistan to the west, Kyrgyzstan to the north, and China to the east....
- Tajikistan Social Investment Fund (TASIF)
Europe
- Albania
- Bosnia
- Macedonia
- Moldova
- Romania - Romanian Social Development Fund,
- Ukraine
Latin America and the Caribbean
- Belize (Social Investment Fund)
- Bolivia (FPS)
- Ecuador (FISE)
- El Salvador (FISDL)
- Guatemala (FIS)
- Haiti (FAES)
- Honduras (FHIS)
- Jamaica (JSIF)
- Nicaragua (FISE)
- Panama (FIS)
- Peru (FONCODES)
Middle East and North Africa
- Algeria Social Development Agency
- Egypt - Social Fund for Development (SFD),
- Morocco Social Development Agency,
- Tunisia - Fonds de solidarité nationale (FSN),
- Yemen Social Fund for Development (SFD)
External links
Sources
- Frigenti, L., Harth and Huque, 1998. Local Solutions to Regional Problems: The Growth of Social Funds and Public Works and Employment Projects in Sub-Saharan Africa, Water and Urban 2 and Institutional and Social Policy Divisions, Africa Region, World Bank, Washington, D.C.
- Rawlings, Laura, Lynne Sherburne-Benz and Julie Van Domelen, 2002: Evaluating Social Fund Performance: A Cross-Country Analysis of Community Investments, World Bank.
- World Bank: Social Funds—Power to the People
Disambiguation
Social Funds in developing countries should not be confused with the European Social FundEuropean Social Fund
The European Social Fund is the European Union’s main financial instrument for supporting employment in the Member States as well as promoting economic and social cohesion. ESF spending amounts to around 10% of the EU’s total budget....
or the Social Fund (UK).