Lebanon has been going through one of the worst economic crises in recent history, with the currency losing over 98 percent of its value, daily food and pharmaceuticals becoming increasingly inaccessible for the country’s poorest, and essential services such as education and healthcare deteriorating rapidly as a result of political impasses and a major Ponzi scheme crippling economic recovery potentials. With approximately 80 percent of the population falling into multidimensional poverty, it is critical to examine existing social protection arrangements that can provide a safety net for vulnerable families. Social protection schemes work on several stages, whether it is preventing poverty in the first place, helping families cope with and mitigate financial difficulties, or ideally, transforming power dynamics within a society in favor of the most marginalized. In Lebanon, however, social protection programming is limited in scope as well as in impact. Considered a success by some and criticized for its palliative nature by others, this article explores both sides of the implementation of the World Bank’s Emergency Social Safety Net (ESSN) program and what it could mean for the country’s future.
Lebanon’s social protection system has long been hindered by the country’s rentier political economy, characterized by minimal state intervention and the proliferation of informal patronage networks. Moreover, the allocation of public funds to social protection specifically has been limited, and much of it went into debt servicing (an estimated 36 percent of government spending between 1993 and 2017), salaries and wages (around 21 percent), and transfers to Electricité du Liban (about 9 percent).
The Lebanese social protection system is characterized by a high degree of fragmentation, exclusion of marginalized communities, a lack in transformative capacities, and recurrent hijacking by traditional political elites
Similar to other structures in the Middle East and North Africa (MENA) region, the Lebanese social protection system is characterized by a high degree of fragmentation, exclusion of marginalized communities, a lack in transformative capacities, and recurrent hijacking by traditional political elites.
In March 2023, the Ministry of Social Affairs announced the extension of the World Bank-financed Emergency Social Safety Net (ESSN) program for a period of six months. Initiated in 2022 with an initial loan of $246 million, the program mostly consisted of a cash transfer component for the country’s poorest 150,000, primarily Lebanese households. This included monthly transfers of $20 per household member (for up to six members per household) and a flat amount of $25 per household. It also included allocating funds to support children at risk of dropping out of school and as well as funds for strengthening operational and third-party monitoring mechanisms to ensure accountability throughout the program. By the end of 2022, ESSN managed to deliver monthly cash transfers to 76,000 households in the country.
Attempts at manipulation
While the inception of the ESSN program took place in 2020, its implementation did not take place until 2022. The two-year delay came at a period where the socioeconomic situation in the country saw a rapid deterioration, with more than 36 percent percent of the population falling into extreme poverty. Concerns about the program’s hijacking by political elites were high: specifically, worries that the program would be used for clientelist purposes, given it was initiated a few months before the 2022 parliamentary elections and the originally-planned 2023 municipality elections.
Indeed, various attempts by influential figures within the parliamentary, central bank, and administrative spheres were made to exploit the program as a means of sustaining the current political system. As the program aimed to provide cash transfers in US dollars, Lebanese parliamentary members sought to change the currency to the devalued Lebanese pound to address foreign currency shortages. Simultaneously, efforts were made to undermine project operations and third-party monitoring by reducing funds intended for that purpose.
Additionally, the government attempted to utilize a database filled with inaccuracies, raising some concerns. For example, the database included duplicate names and applications from deceased persons and civil servants, indicating clientelist practices. The World Bank detected and countered these attempts, but they nonetheless caused a two-year delay.
The World Bank focused efforts on making sure that cash transfers were reaching their intended targets and not being diverted by political players. When it comes to procedural aspects, the ESSN program required applicants to fill an online form, after which house visits were conducted to make sure households and their members are eligible for cash transfer reception. A mix of categorical and, primarily, proxy-means-testing (PMT) methods—a historically preferred method for the World Bank—were used, using variables such as income, number of children, home ownership, and others to estimate poverty. The program employed a newly founded database, using the IMPACT platform for registration instead of old databases. As a result, these measures played a part in mitigating political interference in the program’s delivery and ensuring its access to the country’s poorest.
One shortcoming, however, is the inaccessibility of digital technology for many of the country’s poorest—thus hindering their ability to register online and allowing for political groups to exploit them by offering “help.” As of 2017, only 78 percent of Lebanon’s population had access to the internet, and this also does not necessarily reflect actual usage of online platforms. Consequently, the Progressive Social Party for example conducted a door-to-door campaign titled “We’re by your side,” whereby its local departments took up house visits and gatherings with local municipalities and established call centers to assist poor households in filling the application and guiding them through the process, ultimately giving an advantage to politically-affiliated households.
Criticisms of the program’s palliative nature
Many also criticize the program’s palliative nature, given that it is short-term assistance that is unsustainable by itself, giving a lifeline to the current ruling class instead of pushing for more structural economic reforms, such as a reconfiguration of the country’s inequitable tax system and the banking sector as well as the implementation of short-to-medium term economic recovery plans.
A report by Badil, a Lebanese online publication, sheds light on the Lebanese tax system, which relies excessively on indirect taxes such as value-added-tax (VAT) and thus disproportionately impacts the poorest households. Additionally, the system suffers from a lack of progressive taxes on the country’s richest earners and biggest companies, including a dearth in appropriate progressive income taxation and wealth taxes. Such a restructuring of government revenues would go a long way in ensuring a sustainable and fair way of financing social protection policy and programming.
Thus, instead of relying on outside loans by organizations such as the World Bank, a more sustainable source of funding for social protection programs could come in the form of national revenue, mainly characterized by progressive taxation.
Furthermore, the country’s banking sector structure and current regulations have facilitated the prevalence of tax evasion and money laundering schemes as a result of the abuse of bank secrecy laws, the absence of appropriate and timely capital control measures, and pressures by connected political-banking networks. The latter is composed of political parties directly affiliated to bank owners, politically-affiliated media platforms, and even groups such as the new council of the Beirut Bar Association.
The impact of social protection programs such as the ESSN are hindered by the presence of unsustainable economic and financial policies and a context where the roots of public sector deterioration and accountability are left unaddressed
As such, the impact of social protection programs such as the ESSN are hindered by the presence of unsustainable economic and financial policies and a context where the roots of public sector deterioration and accountability are left unaddressed. However, a few silver linings could be highlighted with regard to the ESSN program and the possible changes it could make to social protection policies and structures moving forward, hopefully toward contributing to more sustainable structures in place for the country’s poorest families.
Transformative capacities
While far from being transformative so far, the ESSN program did make inroads in three significant ways related to the way social protection programs are delivered in the country and which can be built upon for the future.
First, despite the government’s attempts at using old databases of poverty and household conditions that facilitate patronage-related and clientelist practices, the program insisted on adopting a newly expanded database. One of the program’s components, albeit worth only $9 million, is to “ensure an efficient and effective implementation of the ESSN program and lay the foundations for a sustainable [social safety net] delivery, including the building blocks of a National Social Registry.” The last point is crucial: the creation of a new National Social Registry, insulated from political interference, can help pave the way for future social protection programs to be implemented without—or at least with minimized—fears of political cooptation.
Second, the program goes against the government’s conventional methods of social protection implementation, most apparent in subsidies programs on items such as fuel which are known to largely benefit the most well-off. In contrast, the establishment of a social safety net aimed directly at alleviating the suffering of the poorest can play an important role in shifting the allocation of funds toward the more marginalized and toward ensuring the attainment of the three basic Ps of social protection: provision, prevention, and promotion, hopefully leading to more transformative changes in the future.
Third, the ESSN is an expansion of Lebanon’s earlier main social safety net, the National Poverty Targeting Program (NPTP), and is expected to pave the way for the Lebanese government to finance its own national social safety net program using its own resources in the long term. By supporting the establishment of a healthy backbone for social safety net delivery systems, the short-term chaperoning includes a lot of potential for the development of capable shock responsive systems that are complementary, non-fragmented, and part of a bigger socioeconomic strategy.
All of the above, however, depends greatly on a myriad of factors, the most important of which is political will. While the small-scale ESSN has managed to mitigate political sabotage, the long-term and permanent development of capable social protection systems in Lebanon cannot replicate the political insulation that strongly-monitored programs such as the ESSN enjoyed. In that regard, structural and political change is indispensable.
Marwan Issa is a researcher and writer with extensive experience in qualitative research, report writing, partnership building and project coordination.