Financing Solutions for Social Protection in COVID-19 Response and Recovery

The global pandemic has posed major development challenges affecting the lives of millions of people around the world. COVID-19 response measures have curtailed economic activities and placed a growing number of individual’s livelihoods at risk, with many slipping below the poverty line with narrow options for recovery.

Social protection serves as a pillar of counter-cyclical economic policy by delivering rapid financial support to the most vulnerable, providing resources to those that will use them to both directly protect themselves and support the economy. For many countries, social protection programs have been a crucial part of the COVID-19 response. Although still insufficient, the coverage of recent programs has grown exponentially across the region. The most urgent priority is rapidly increasing the coverage of these traditional social protection programs.

Financing for social protection mainly comes from public funds. However, the almost universal coverage required to deal with the pandemic raises a need to explore new sources of finance for social assistance during the response and recovery efforts. To expand the coverage of the current social protection system, it is important to explore alternatives to either expanding the fiscal space or leveraging private finance into this sector through innovative finance schemes.

This session explores some of these new financing options and considers the benefits of partnerships which engage the private sector in social protection programming. It will also review real-life initiatives that highlight ways of working between government, private sector investors and individuals in reshaping the landscape of social protection into the future.

Key takeaways:

  • Showcase how public-private partnerships around social protection schemes that use innovative finance are even more crucial for a robust and expanded social protection response to COVID-19.
  • Explore the factors and pre-conditions for building effective social protection programming with sustainable financing in a manner that facilitates longer term recovery. What is the role of impact investors in this space?
  • Showcase how the current confluence of both climate and pandemic risks is stretching our institutions and financing systems/mechanisms to the limit, but that there are also opportunities to re-imagine the future of how we do business and how the financial sector can innovate in order to reach the poorest, while also safeguarding SDG gains.