Higher shares of social spending do not guarantee better social conditions in sub-Saharan Africa

• Author: Paulo Silva Lopes
• Position: IMF African Department
• Pages: 90-93

Page 90

Sub-Saharan Africa remains one of the poorest regions of the world, showing little improvement in average living standards despite decades of financial and technical assistance. Increasingly, the focus of international development assistance to sub-Saharan Africa has shifted to improving social conditions, leading to greater interest in government spending policies and how they affect social priority areas. In a recent IMF Working Paper, Paulo Silva Lopes (Senior Economist, African Department) analyzes trends in regional social indicators and their correlation with measures of government spending and discusses underlying policy implications.

In the mid-1990s, international development assistance to sub-Saharan Africa began to address social priorities more explicitly.While continuing to emphasize policies designed to generate growth and correct financial imbalances, the IMF, too, has acknowledged poverty reduction as the central objective of policy, to which growth is the key. Particularly since the establishment of its Poverty Reduction and Growth Facility in 1999, the IMF has begun encouraging African countries to pay closer attention to the composition of government spending and to expand or at least preserve shares of social spending in their budgets from year to year. Although usually a step in the right direction, this approach cannot guarantee that actual spending will be adequate to improve social conditions in a meaningful way.

"A Comparative Analysis of Government Social Spending Indicators and Their Correlation with Social Outcomes in Sub-Saharan Africa" supports the case for increased scrutiny of social spending in the region by highlighting actual connections between social spending indicators and social outcomes using the most comprehensive data available for the region. The working paper also suggests some policy responses that are relevant not only for governments in the region but also for the international donor community in its role in supporting social programs.

How is social spending measured?

Identifying public spending that is truly social is a difficult exercise because there is no gauge of social merit that applies to every individual situation. Based on a functional classification of government expenditure, social spending is usually understood...