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Universal social protection coverage is off-track

Time and time again we see the importance of universal social protection. It is a first line of defense to avoid deepening poverty in crises and helps overcome systemic poverty by empowering people to become economically self-reliant and invest in themselves and their children.

Still over 3.4 billion people live without social protection coverage (International Labour Organization (ILO), 2021)1 and most of them live in low-income countries (LICs) and lower-middle-income countries (LMICs). Social protection spending relative to gross domestic product (GDP) is 4.5 times lower in LICs than in high-income countries, with little change from a decade ago. Moreover, globally, only about 25% of financing goes for the poorest 20% of the population (Tesliuc et al., 2025).

Low coverage and stagnant financing stand in stark contrast to increasing risks that disproportionately affect people living in poverty, including from climate change and growing conflict and fragility. For uncovered households, the impact of any single shock can mean having to skip meals, sell off valuable assets, and pull children out of school, all with lifelong impacts.

To accelerate progress against these challenges, the World Bank has set an ambitious new target to extend social protection coverage to an additional half a billion extremely poor and vulnerable people by 2030. Achieving this goal will require collective action to address the global fiscal deficit in social protection spending.

Financing reform to double down on our social protection coverage

Reaching half a billion people with social protection will entail continuing to work with over 70 governments, leveraging our knowledge and learning through building new evidence, facilitating cross-country peer-to-peer exchange, and close collaboration with development partners. There will also be a need to make meaningful use of the World Bank’s existing social protection financing of US$29 billion to continue investments in digital delivery systems to make spending in social protection more efficient. Such foundational investments can help to leverage labor market and fiscal reforms and complementary financing to reach our goal.

Five specific actions could increase social protection financing to reach more people.

Improve effectiveness of current social protection spending

A top priority is to ensure that existing social protection budget resources are spent effectively. We must redouble efforts to ensure that resources reach those who need them most, and investing in delivery systems that improve the quality and cost-effectiveness of services.

There is strong potential for existing social protection funding to make substantial gains against poverty. For emerging and developing economies (EDEs) with extreme poverty headcount below 10%, improved pro-poor targeting of existing social assistance budgets could virtually eliminate extreme poverty in these countries. And even in LICs and LMICs with extreme poverty rates from 20% to 80%, existing budgets could significantly decrease the total income shortfalls of the poorest 20% of the population. As of 2022, the income shortfall of the extreme poor in EDEs was estimated at US$163 billion (in USD 2017 purchasing power parity [PPP]). Improving the efficiency of existing social assistance spending to technically and politically feasible levels could reduce this shortfall to US$120 billion (Tesliuc et al., 2025).

With increasing fiscal constraints, prioritizing high return investment is more important now than ever. Government-led Economic Inclusion (EI) programs are one such option, with long-run benefits that significantly outweigh initial costs. Niger’s EI program demonstrated a benefit-cost ratio of 127% 18 months after implementation, while in Zambia, the program costs break even with their returns in just 12 months. Assuming sustained impacts, both Niger and Zambia show positive returns on investment, at 73% and 36%, respectively (Bossuroy et al., 2022; Botea et al., 2023).

How benefits reach people matters too. Digitalization of delivery systems, for example, can improve the efficiency of existing spending. In Liberia, the cash transfer program struggled with physical cash payments that took around 17 days on average and cost nearly US$8 per transfer. Now, the introduction of mobile payment has reduced delivery costs to US$2.5 per transfer and reduced the timeframe for delivery of missed payments substantially (Tesliuc et al., 2025).

Prioritize progressive spending, and realize climate benefits in the process

Globally, generalized subsidies on fossil fuels, agriculture, and fisheries exceed US$7 trillion (roughly 8% of global GDP); they are regressive, inefficient, expensive, and environmentally unsound (Arze del Granado et al., 2012; Damania et al., 2023). In the Middle East and North Africa, those subsidies are over five times higher than spending on cash transfers and twice as high as social assistance (Ridao-Cano et al., 2023).

Redirecting inefficient fuel subsidies to social protection using dynamic and digital social registries could lead to more effective and better-targeted benefits. This also has the advantage of discouraging fossil fuel usage, thereby contributing to national and global climate goals.

Egypt showcases the potential impacts of successful subsidy reform. One year after beginning to phase out fuel subsidies, the government used the resources saved to double the health budget, increase education spending by 30%, and launch a new national cash transfer program. The cash transfer program, Takaful and Karama, now reaches almost 20% of the population with targeted and effective assistance (El Enbaby et al., 2022). Continued investment in digital systems by Egypt helped to scale up this support, ensuring that those in need receive resources and services directly while minimizing wasteful expenditure on fuel subsidies.

Increase the domestic tax base for social protection spending

When efficiency gains and reallocation are insufficient, countries can enact appropriate tax reforms to increase domestic revenues toward adequate social protection coverage. Policy recommendations include broadening the tax base through appropriate tax reforms including a thorough fiscal incidence analysis, enhancing the progressiveness and effectiveness of the tax system, and supporting domestic revenue mobilization (World Bank, 2022). Bolivia, Botswana, Mongolia, and Zambia increased their revenue base with new taxes on natural resources that were earmarked for social protection and Brazil did likewise with a tax on financial transactions (Bierbaum and Schmitt, 2022).

Efforts to increase domestic resources to broaden social protection coverage also require ringfencing progressive public spending. Social protection programs often face fierce competition across different government priorities for limited resources. Fiscal reforms therefore must come with the political will to prioritize social protection budget allocations. Citizen engagement can help: with support from United Nations International Children's Emergency Fund (UNICEF) and ILO, Mozambique adopted Social Action Budget Briefs to monitor social protection budget allocations against national strategic objectives (Bierbaum and Schmitt, 2022).

Demonstrate impact to leverage climate financing

Already the World Bank has investments of almost US$21 billion across 91 social protection programs with activities that help poor people respond better to the risks of climate change.

We must continue to demonstrate how social protection supports poor and vulnerable people in adapting to climate change. In Ethiopia, the Productive Safety Net Program (PSNP) public works activities have reduced surface run-off, increased water infiltration, raised groundwater levels, enhanced spring yields, and increased stream base flows and vegetation coverage. Furthermore, by leveraging economic inclusion activities, the PSNP program has led to positive environmental impacts and promoted livelihood diversification and enhanced productivity, thereby decreasing people’s vulnerability to climate change.

And we must continue to build the evidence that pre-emptive social protection investments and strengthening social protection systems are the best response to future shocks and crises – improving outcomes for people and the effectiveness of financing.

In Pakistan, the Benazir Income Support Program (BISP), the country’s largest government-led cash transfer program, was scaled-up to provide 2.8 million families with roughly US$100 within a week of the 2022 floods. Rapid action was possible by leveraging information from the disaster risk management authorities linked to the geocoded data in the national social registry.

Leverage partnerships for more effective collective action

For LICs and fragility, conflict, and violence (FCV)-affected countries in particular, international support will continue to play an important role to complement efficiency gains and domestic spending. High fragmentation in donor financing calls for increased coordination in aid delivery (Watkins et al., 2024).

By 2030, an estimated 59% of poor people worldwide will be concentrated in FCV-affected countries (World Bank, 2024) and humanitarian interventions play a critical role in saving lives in these settings. However, the lack of predictability and sustainability often misses opportunities to build resilience, human capital, and productivity effectively. Somalia, Ethiopia, and Yemen, among others, offer encouraging examples of collaboration in supporting and working through existing country systems (Al-Ahmadi and De Silva, 2018).

In Somalia, humanitarian financing dwarfs development aid: US$1.1 billion and US$869 million, respectively, in 2018. The Somalia Baxnaano Program aims to align humanitarian and development efforts by supporting national social protection systems. Through partnership with the government, the British Foreign, Commonwealth & Development Office (FCDO), UNICEF, World Food Programme (WFP), and the World Bank, the program reached 181,000 households with cash transfers in 2021 and provided 100,000 households with emergency transfers in response to concurrent shocks in 2020 (Al-Ahmadi and Zampaglione, 2022).

Countries at all income levels will benefit from promoting a larger role for the private and financial sectors to increase available financing. One option we are exploring in that context is the potential of innovative financing mechanisms, such as impact bonds, sovereign wealth funds, debt swaps, and Payment for Ecosystem Services (PES) (Watkins et al., 2024).

Coordination on the knowledge agenda will be crucial to make the most effective use of available resources. We must leverage, share, and coordinate analysis, evidence, data, technical assistance, and implementation support across national stakeholders and international partners. It is critical that we work together to build the evidence base for effective social protection at the global, national, regional, and local levels, scaling up what works, and reforming what does not.

Financing reform for shared prosperity

There is no one-size-fits-all solution to the massive social protection financing challenge. We need to carefully analyze how to make the best use of scarce social protection resources, whether at the global, national, or local level. We also need to leverage more resources – both domestically and through partners and the private sector – to invest in social protection responses to the permacrises that we face, with climate and fragility high among these challenges. Partnerships, knowledge sharing, and collaboration are key to learning, scaling up and expanding what works and improving what does not. Overall, strengthening and expanding social protection systems are critical as we work together to end extreme poverty on a livable planet.

Footnotes

Disclaimer The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Bank, its executive directors, or the governments they represent.

1. The estimated population of the 144 World Bank client countries is 6.8 billion.

References

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