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New Patterns of Social Provision

by Germano Mwabu, Cecilia Ugaz and Gordon White

Human development indicators have improved considerably over the last thirty years. Nevertheless, poverty remains widespread and deep. The World Bank’s World Development Report 1990 projected that the total number of the poor - defined as people surviving on less than PPP$ 1 per day - would have fallen from 1,125 to 825 million between 1985 and 2000. Yet, the Bank’s recent assessments indicate that the original target will be missed by a wide margin. The number of poor worldwide was expected to approach almost 1,300 million by 2000. In Africa, the situation remains particularly bleak, the result of structural economic weakness, the unfolding of armed conflict and the spread of HIV/AIDS. In low-income countries, social needs for basic education, health care, safe water, and sanitation, remain unmet.

Getting social provision right is therefore a high priority for governments and the development community. But what form should social provision take? In recent years, many countries have moved away from the traditional ‘welfarist’ approach that accords pre-eminence to the state as provider and funder in the area of social provision. Instead, a market-driven approach has become fashionable. This assigns a larger role to the private-sector in social provision, with state provision scaled back to focus on services for the very poor. But a third option is emerging, a model that factors in the capacity of civil society.​

Ensuring Access to Social Provision

​State organisations dominated social provision from the 1950s to the late 1970s, but came under increasing criticism. It was argued that incentives were wrong; state officials did not have the incentive to put resources to their best use; and setting low or zero prices for services led to their ‘overuse’. State provision was seen as neither efficient nor equitable by advocates of market-based provision. They favoured an increased role for the private sector in social provision, leaving the state as the residual provider for the poor. This approach became increasingly popular in the 1980s, in part because of the policy conditionality attached to structural adjustment lending.

However, there are also serious problems with market-based social provision and these limit the ability of the private sector to act as sole provider. The state became involved in social provision in the first place because primary education, health care, and other such services benefit society as a whole, not just the individual recipient. These are important ‘externalities’, which are typically under-supplied by the private sector. Moreover, immunisation and primary schooling can be ‘merit goods’; individuals may not accurately assess the consumption benefits of these, leading to their underconsumption.

Recent evidence for low-income countries shows that the marketbased approach has, in some cases, led to underprovision of these services and to a reduction in their utilisation. The results have been a worsening of equity, and a reduction of human capital. Hence, while private provision can have an important role, unfavourable outcomes have dampened earlier enthusiasm for market-based approaches as the only solution to social provision.

Towards New Partnerships

Given that neither the state nor the market offer complete solutions to the efficiency and equity problems encountered in the area of social provision, new ways forward must be found. It is now widely recognised that civil society - community, religious, and neighbourhood organisations, and NGOs - must be more closely involved in the provision of social services. This new trend is supported by WIDER research. The new approach is one of welfare pluralism. Social provision must involve the efforts of many providers - the state, the market, and civil society. This will help to avoid the familiar inefficiencies of state supply and the social exclusion sometimes associated with market provision.

Although civil society has many capabilities - it can be a low cost provider, it can respond directly to community needs and it seems to be in a better position to reach the poor - it does need support. First, it needs an enabling environment; governments must reduce impediments, such as over-zealous regulations, that constrain the formation and operation of civil society organisations. Second, civil society needs support in building its management capacity in the area of social provision. But in providing this support there is a danger that outside assistance can change the nature of civil society itself, for example by bureaucratising it, so that it becomes less responsive to local needs - leading (in extreme cases) to a loss of legitimacy with local people. For this reason, assistance to civil society in the area of social provision must be undertaken in the context of mechanisms that allow community feedback on the effectiveness in social provision.

The research undertaken by WIDER finds that the appropriate mode of social service provision depends on the nature of the service delivered. Even so, in the case of basic social services we can emphasise four key elements. First, state involvement in the provision and financing of social services is highly desirable since otherwise many vulnerable people are excluded from access. Second, efficiency of provision must be enhanced so that scarce resources can stretch further. Third, it is desirable to devolve responsibilities for social service provision to lower levels of government. Local provision can often respond more readily to demand. But, if it is to lead to efficient and equitable outcomes, decentralisation must first and foremost involve the participation of individuals and communities as stakeholders. Finally, social service providers should be co-ordinated and regulated to ensure that the work of the multiplicity of providers meets social goals. Welfare pluralism is therefore the way forward in social provision.
 

The authors were co-directors of a WIDER project on social provison. The project results will be published as Social Provision in Low-Income Countries: New Patterns and Emerging Trends, Oxford University Press for WIDER (May 2001). Germano Mwabu is a lecturer in the Department of Economics, University of Nairobi, Kenya, and was formerly a research fellow at WIDER. Cecilia Ugaz is a research fellow at WIDER. The late Gordon White was Professorial Fellow at the Institute of Development Studies, University of Sussex, UK.