Writer: Sahar Fdhila
International financial institutions have consistently advocated the adoption of pro-poor social protection systems, arguing that low-income countries are not able to finance universal systems. Using the MENA Costing Tool, we attempted to simulate the cost of introducing a universal system in North African countries (Tunisia, Algeria, Morocco, and Egypt) by gradually increasing the population covered over the years. We found that the cost of introducing such a policy in the early years could potentially be affordable if political decisions are directed toward minimizing some of its costs, such as tax expenditures, or debt service, or excessive specific spending and generating additional resources through the adoption of progressive and more equitable tax reforms. Other economic reforms are always needed. Focusing on sustainable economic growth through structural and monetary reforms, as well as providing incentives for people to enter the formal sector, are critical strategies to facilitate the creation of universal systems. Further analysis of the financing gap for universal social protection systems in the region is needed, and this will be an ongoing effort that we will update on an ongoing basis.
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