Algeria needs a comprehensive strategy to review and reform its stretched social protection system. Fiscal space remains an issue but there are approaches that can have an immediate impact.
This research paper maps the current social protection system in Algeria, including the broad but often fragmented state, non-state, formal and informal services and actors. It also highlights the richness and the diversity of non-state actors including but not limited to religious endowments, local civil society organizations (CSOs), diaspora networks, and djemaa or tajmaat (village associations) in Kabylia – over 108,000 associations exist with some 45 per cent formally registered with the Ministry of Interior and Local Authorities.
SDG performance in Algeria shows mixed results. The country has achieved SDG 10 (reduced inequalities) and, according to the SDG dashboard (Table 4), Algeria has the lowest number of SDGs that face ‘major challenges’ when compared to regional peers. However, ‘significant challenges’ remain for eight SDGs. Commitment from the government to sustainable development is enshrined and defined in the 2016 constitutional amendments, with an inter-ministerial coordination committee representing all ministries and working with other relevant agencies on SDG matters.
As demonstrated in this paper, the country has a comprehensive social protection system with a considerable legal framework. However, there are significant coverage and adequacy gaps. Algeria’s social protection system compares well with similar offerings in the MENA region, but the country’s finances are under strain, and questions around sustainability remain, despite the recent uptick in hydrocarbon prices.
Reforming these mechanisms is necessary to achieve a more sustainable social protection system. While it is important for policymakers to think about effective policies and experimentation in the social protection space, it is also critical for the government to be responsive and inclusive in its approach. This requires policymakers to initiate a debate on the issue and determine short-, medium- and long-term social protection strategies. Such social protection strategies should first and foremost be informed by a risk and vulnerability assessment to avoid implementing policies that are not suitable for the Algerian context or relevant to the risks faced by its people. There is thus a need to regularly collect data in order to monitor and evaluate social protection programmes and proposals.
The development of an overarching national social protection strategy can offer some room for blue-sky thinking with a view to introducing innovative social policies.
This approach should also highlight the gap between current social protection capacities and existing risks, in particular, identifying where people are excluded or left behind. An effective strategy would implement social policies that fill these gaps, including through expanding coverage. Algerian policymakers should also pay attention to the transformative elements of social protection that enhance equity and preserve the rights of minorities, including refugees. To be effective, a strategic approach would need to go beyond the basic modest security income suggested by the International Labour Organization and propose an adequate social benefit to effectively lift people out of poverty and vulnerability. Such a strategic approach has an opportunity to consider and include environmental sustainability and gender issues.
The development of an overarching national social protection strategy can also offer some room for blue-sky thinking with a view to introducing innovative social policies. An example of this would be for Algerian policymakers to undertake a detailed study (and pilot) to evaluate the cost, feasibility and effects of implementing UBI. The authors’ calculations find that the cost of introducing UBI in Algeria varies significantly. The least generous scenario in the paper, at 70 per cent of the poverty line for adults and no benefits for children, would cost 9.3 per cent of GDP, while a median scenario covering 50 per cent of average household expenditure for adults and children is estimated at 20.2 per cent of GDP.
Policy experimentation and inclusive dialogue will be key to unlocking innovative social protection policies that in turn increase adequacy, expand coverage and enhance sustainability.
Recommendations
- Policymakers in Algeria could initiate a full and comprehensive independent study on both the most effective way of implementing energy subsidy reforms and the associated impact of expanding cash transfers. The study should include behavioural change, stakeholder mapping, political economy analysis and strategic communication components. This should be administered by the Ministry of Finance, Ministry of Energy and Mines, and state-owned utility company Sonelgaz, in consortium with private sector and technical experts from multilateral organizations.
- To improve governance and enhance management and communication across social protection programmes, Algerian policymakers could develop an integrated digital information system that allows data-sharing and coordination among the different programmes. A second order benefit from such an information system could be to promote cooperation and partnerships between state and non-state actors (CSOs etc.) operating in the social protection space, and in turn enhance inclusivity and effectiveness. The relevant stakeholders that could work together on such an initiative would include the Ministry of Finance (as lead), the Ministry of Digitization and Statistics, Ministry of Interior and Local Affairs, Ministry of Religious Affairs and Endowments, Ministry of National Solidarity, Family and Women’s Affairs, and various CSOs and community networks. Government incentives could be made available for CSOs that work to unify the database and pool resources.
- This paper highlights the need for additional fiscal space to expand coverage of social protection measures to all vulnerable groups. The different available options for Algeria to increase investment in social protection, include reprioritizing public expenditure, spending smart and focusing on improved revenue collection, particularly from the informal sector. The Ministry of Finance in collaboration with the Ministry of Knowledge Economy, Start-ups and Micro Enterprises, and the Ministry of Labor, Employment and Social Security can conduct a pilot study (possibly region specific) experimenting with tax reform across informal micro- and small enterprises. Experimentation in the pilot study could cover smaller single fees paid to local administrations by informal economy actors (workers and businesses), with more established micro and small enterprises benefiting from special initiatives – within the general tax regime – which consist of a lower tax rate and a simplified system.
- The lack of available social protection and household data in Algeria underscores the need for regular data collection using innovative methods, such as machine learning and big data. For instance, using satellite imagery to collect data on poverty and vulnerabilities could complement traditional costly and irregular survey data. Policymakers should prioritize accelerating progress towards digitizing administration and administrative data, enabling more efficient and effective data collection. The Ministry of Digitization and Statistics is a suitable candidate for spearheading this initiative. Collaborating with pertinent domestic and international stakeholders (such as the UN) on programmes and projects could boost this endeavour.
- The Ministry of Finance in coordination with the prime minister’s office can consider implementing a study consisting of a pilot on the design, feasibility, costs and effects of UBI. This pilot study could be carried out in a specific region and/or for a specific constituency or age group (e.g. young informal entrepreneurs between 18 and 35). In global terms, Algeria performs relatively well on citizens holding official proof of identity, which enhances the prospects of such activity (were a random approach be taken). The study can also explore the capabilities, constituencies and coalitions that would be required for any potential scaling up should the results of the sample group be successful. Best practices can be taken from other similar studies in countries such as Brazil, Finland, India, Mexico, Namibia and Uganda.
- Finally, social protection reform should prioritize more active social policies instead of relying solely on passive cash transfers. For instance, active labour market policies to increase employment levels should be reactivated in Algeria to have direct impact. Social protection should also focus on enhancing equity and social cohesion within society beyond poverty reduction. This can be done through improving the adequacy of the family allowances policy and through providing childcare programmes to boost women’s economic participation. By doing so, policymakers can ensure that social protection measures provide not only immediate relief to those in need but also promote social inclusion, gender responsiveness and sustainable development. The lead ministries in this space, including the Ministry of National Solidarity and the Ministry of Labor, Employment and Social Security, can work together to lead such an initiative while involving other relevant stakeholders in a social dialogue.
