UNICEF INNOCENTI PUBLICATIONS BASIC SERVICES FOR ALL? Santosh Mehrotra, Jan Vandemoortele and Enrique Delamonica United Nations Children's Fund Innocenti Research Centre Florence - Italy INNOCENTI PUBLICATIONS BASIC SERVICES FOR ALL? PUBLIC SPENDING AND THE SOCIAL DIMENSIONS OF POVERTY Santosh Mehrotra, Jan Vandemoortele and Enrique Delamonica United Nations Children's Fund Innocenti Research Centre Florence - Italy BASIC SERVICES FOR ALL? This publication has been jointly produced by the Division of Evaluation, Policy and Planning, UNICEF, New York and the UNICEF Innocenti Research Centre, Florence. The opinions expressed in this publication are those of the authors and do not necessarily reflect the policies or views of UNICEF. Copyright © UNICEF, 2000 Printed by: Arti Grafiche Ticci, Siena ISBN 88-85401-49-X Readers citing this publication are asked to use the following form of words: Santosh Mehrotra, Jan Vandermoortele and Enrique Delamonica (2000), ‘Basic Services for All? Public Spending and the Social Dimensions of Poverty’. Innocenti Publications. Florence: UNICEF Innocenti Research Centre. Front cover designed by Miller, Craig & Cocking, Oxfordshire - UK Layout and phototypesetting: Bernard & Co, Siena - Italy Printed by Arti Grafiche Ticci, Siena - Italy April 2000 ii BASIC SERVICES FOR ALL? Contents Preface: Basic Services for All? 1 Introduction: Tolerating the Intolerable 3 The Arguments for State Provision 5 Human Development and Economic Growth 7 The Facts and Figures on Public Spending 11 Mobilizing Resources 19 Efficiency and Effectiveness 24 Donors 29 An Agenda for Action 33 Annex 37 iii THE UNICEF INNOCENTI RESEARCH CENTRE The UNICEF Innocenti Research Centre, is based in Florence and is the main research arm of UNICEF, the United Nations Children’s Fund, helping to shape the orga- nization’s human rights agenda for children. Since its creation in 1988, the Centre has provided solid data on the changing needs of children in both developing and industri- alized countries. Its strong focus on chil- dren’s rights has helped UNICEF and its part- ners promote a new global ethic for children based on their fundamental human rights. One of the Centre’s main aims is to encour- age the effective implementation of the 1989 United Nations Convention on the Rights of the Child (CRC) in every country – rich or poor. The Centre gives particular priority to problems of equity, economic affordability and the financing of social programmes to benefit children. UNICEF Innocenti Research Centre Piazza SS. Annunziata, 12 50122 Florence, Italy Tel.: (+39) 055 203 30 Fax: (+39) 055 244 817 www.unicef-icdc.org BASIC SERVICES FOR ALL? PREFACE BASIC SERVICES FOR ALL? There is a general consensus that basic social services are the building blocks for human development. Indeed, they are now accepted as fundamental human rights. But there is a widening gap between this consensus and the reality of public spending on basic services in the developing world – a gap documented in Basic Services for All? 1 The report highlights the shortfall of up to $80 billion per year between what is spent and what should be spent to ensure universal access to these essential services. Governments often make proud claims about how much they spend on health and education services, when in fact not all such services benefit the poor, as the report demonstrates. By denying citizens access to the basic social services – primary health care, clean water and proper sanitation and basic education – governments are violat- ing the human rights of their citizens. The report begins by outlining the human cost: the lives lost, children out of school, the millions undernourished, and the billions without safe water and sanitation because they lack basic social services. It goes on to describe the current facts and fig- ures about public spending on basic services, with around $206 billion to $216 billion (in 1995 prices) needed to provide universal services each year, and only $136 billion currently being spent. The shortfall is twice as high as the estimate of up to $40 billion at the time of the World Summit for Social Development in March 1995. The report then lays out the moral, instrumental and legal arguments for state pro- vision of basic social services. Looking at the historical perspective, the report describes the transformation that began in industrialized countries 150 years ago as they took their first steps towards state provision of health and education. It goes on to explain the syn- ergies between the different basic services, and between human development, income- poverty reduction and economic growth. The industrializing nations of the 1800s tapped into these synergies, as have the ‘high-achieving’ developing countries that have improved their social indicators in the last half century. It outlines the successes of these high achievers – developing countries with far better social indicators than might be expected given their national wealth. After examining the role of donors in the provision of basic social services, the report concludes with a Ten Point Agenda for Action. In 1994, with funding from the Governments of the Netherlands and Norway, UNDP and UNICEF launched detailed studies in more than 30 countries across Africa, Asia and Latin America to gain a detailed picture of investment in basic social services. These studies asked how much governments were spending on these services, who was really benefiting from this spending (the poor or the non-poor), and how efficiently the spending was being carried out. 1. This report is a summary of a forthcoming book “Basic Services for All? Public Spending and the Social Dimensions of Poverty” by Santosh Mehrotra, Jan Vandemoortele and Enrique Delamonica. For information, please contact Santosh Mehrotra at the UNICEF Innocenti Research Centre, Florence ([email protected]). 1 BASIC SERVICES FOR ALL? Basic Services for All? uses data gathered in these countries to show how much, or how little, governments are spending on basic social services. While building up a picture of public expenditure and establishing a dialogue with government officials and other experts in the process, the studies confirmed an alarming fact - most governments do not know how much they are spending on basic services. It argues that lack of data is a major barrier to the provision of basic services for children, and calls on governments to create more effective systems to gather, monitor and analyze such vital information. The report urges developing country governments, donors and international finan- cial institutions to provide greater and more targeted resources for basic social services. One option explored is the 20/20 initiative whereby developing countries would com- mit 20 per cent of their budgets to basic social services, while donor countries would match that commitment by allocating 20 per cent of their official development assis- tance to such services. Basic Services for All? calls for a wider recognition of the fact that economic growth, if not properly handled, can increase the gap between rich and poor. Noting that income distribution has been worsening in a large number of developing countries, it urges policy-makers to recognize and exploit the synergies between basic social ser- vices, and between income-poverty reduction, social development and economic growth. And it explores ways in which governments can mobilize resources for basic services, using methods that they already have at their disposal. Instead of reducing public expenditure, policies could, for example, place more emphasis on revenue mobi- lization via taxation to cut budget deficits. The report maintains, however, that the effective and efficient use of resources is every bit as important as the actual amount of money spent. And it stresses the need for more partnership between governments, donors and communities, recognizing that aid can be more effective if the recipients are in the driver’s seat. Basic Services for All? urges donors to eliminate the inconsistency between aid policies and their international policies on trade. It calls for measures to address the heavy burden of debt repayment which exceeds spending on basic social services in many developing countries, suggesting that no more than 20 per cent of the revenue of the most highly-indebted poor countries should be spent on debt servicing. Addressing the international financial institutions, the report recommends that social policy should be seen as complementary to macro-economic policy. Where macro-economic stabilization policies are determined by international financial institu- tions or by national Ministries of Finance, leaving the social consequences of these poli- cies to other agencies, the synergies between social policies and macro-economic poli- cies cannot be triggered. Meanwhile, says Basic Services for All?, the continuing neglect of basic social ser- vices in developing countries is part of a pattern of economic development that under- values the social sector, democratic participation and the equitable distribution of resources. 2 BASIC SERVICES FOR ALL? 1 INTRODUCTION: TOLERATING THE INTOLERABLE In the early 1990s, world summits and global conferences set specific social develop- ment targets in the hope that these would lead to a new commitment to human devel- opment in economic and social policies. The targets outlined at the World Summit for Children in 1990, for example, pledged to halve maternal mortality and child malnutri- tion by the year 2000. The World Summit for Social Development in 1995 and the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development in 1996 reaffirmed commitment to such achievable social goals. All of these conferences confirmed an international commitment to the universalization of basic social services.2 It is true to say that significant headway has been made since 1990. One million fewer children under the age of five die each year and polio is on the verge of eradica- tion. But access to basic services is far from universal and the results of poor quality ser- vices are there for all to see.