Governance and financing of social protection in Morocco

Governance and financing are the two main components on which Morocco is coordinating its actions in order to succeed in the reform of social protection that marks this new decade and that constitutes, without a doubt, an unprecedented social resolution, which is part of a continuity approach to major projects. This policy has enabled the Kingdom to develop an undeniable specialization profile, which has paved the way for its regional and international anchorage, and, in turn, laid the foundations of a competitive and resilient economy.

This social impetus came in the midst of a global pandemic crisis, which left behind a heavy toll, especially on the socio-economic front. Morocco's long-standing professionalism in crisis management enabled it to meet the challenge and pave the way for an unprecedented social resolution through the generalization of social protection to all resident Moroccan citizens.

However, as part of a series of articles dedicated to social protection, we have presented in the two previous articles, the genesis of social security systems in Morocco, the challenges that currently weigh on this neuralgic sector, as well as, the ins and outs of social reform committed by the public authorities as both a palliative to the crisis of the covid-19 and a strategic response to the socio-economic development that the kingdom has experienced in recent decades.

The present article continues this process by outlining the key success factors on which public decision-makers are working in order to inhibit the bottlenecks of the social project in progress and create the conditions for the development of the expected synergy effect between the variables of the project, which is necessary for the success of the social transition.

This time, the analysis will focus on the governance and financing of social protection as two major variables to be addressed in order to put the protection train on the growth trajectory and bring about the social development for which this project is dedicated

I- System governance: the basis for successful reform :

The creation of a system of governance of social data of all the actors, stakeholders and organizations that work in the protection system, is a decisive step, even crucial, with the aim of obtaining a better system of collection, processing and analysis of information.

This centralization mechanism will make it possible to generate an overview of the social matrix, capable of informing public decision-makers through a strategic diagnosis of the situation, on the actions accomplished and the gaps to be filled, as well as to learn about and foresee the shortcomings, insufficiencies and dysfunctions inherent to the social programs concerned.

In this sense, the implementation of such a reliable and digitalized governance system is the keystone to meet the challenges of the generalization of health coverage and succeed in the social transition. A decisive step that will be beneficial to unify the institutional framework, reduce the number of stakeholders, merge social programs with the same destination, to facilitate their monitoring and evaluation, as well as, simplify and coordinate the procedures of their execution and optimize, ultimately, the management costs of the system.

This policy of governance and management of the social protection system is part of the state's strategic vision to introduce good governance practices, including transparency of procedures, and result-based management, performance and efficiency in the execution of investment projects.

Thus, to take into account an objective logic of monitoring and evaluation of the results obtained, to develop a culture of accountability and methods of evaluation of the actions undertaken by the decision-makers in accordance with the international standards and requirements in this field...

In addition, and for a sound implementation of this system, the public authorities have developed a system of global targeting of the whole population in order to better visualize and circumscribe the field of intervention in favor of the deprived social.

The collection of data through the deployment of such a targeting device will allow for better management of the main safety nets, while facilitating the use of modern payment instruments via counter and secure mobile banking applications..., including the prospect of creating a unified body responsible for coordinating and overseeing all social protection schemes.

It should be recalled that the government uses this mechanism to target disadvantaged populations in response to the shortcomings of the current subsidy system, which produces the opposite of the expected results by benefiting well-off households to the detriment of the poor. This mechanism aims to improve the adequacy, relevance and adaptability of the social protection system in order to mitigate the impact of endogenous and exogenous economic shocks.

This targeting policy aims at a cash transfer to the vulnerable and could provide an opportunity to gradually replace the expensive and inefficient subsidy system currently in place.

Moreover, the executive has begun to deploy the targeting registers, in accordance with the provisions of Law No. 72.18 on the development of a targeting system for the beneficiaries of support programs and social support supervised by public administrations, local authorities and public bodies.

The implementation of such a socially oriented register can allow for the implementation of a specific aid system, whose rate of production of programs can be increased or decreased depending on the situation and vary according to the needs of the targeted populations.

However, these targeting mechanisms would be more effective in protecting the poor from multiple hazards and shocks, including economic ones, as evidenced by the current trend of inflationary pressures on food staples, which could further contribute to improving the efficiency of resource allocation and facilitate adaptations to such situations. 

II- Financing social protection: the keystone of the system's sustainability

On the financing side, the challenge of sustainability and keeping social funds viable and sustainable in the long term remains a central issue that requires the collaboration and coordination of all forces in the nation.

Certainly, and in addition to the method of optimized budgeting by grouping the actors, it will be necessary to strengthen and perpetuate the financing by additional sources, to face the gap remaining in terms of resources and expenses, in a spirit favoring efficiency and positive impact on the citizen.

Thus, the financial forecasts as to the budgetary envelope necessary for the realization of this mega-building, by 2025, table on an amount worth 51 billion dirhams as annual average.

The breakdown of this amount will be distributed among the four program components of the social protection reform project, namely: firstly, the generalization of basic medical coverage (AMO), the cost of which would amount to 14 billion dirhams.

Secondly, there is the family allowance program, the cost of which is estimated at 20 billion dirhams. Thirdly, a budget of 16 billion dirhams would be dedicated to the extension of the membership base of the pension scheme and finally 1 billion dirhams is planned for the beneficiaries of the social program of the loss of employment allowance.

Regarding the sources of financing of this major reform, the forecasts are based on a participation of social solidarity of the State to those who do not have the capacity to contribute to the various funds of welfare and social solidarity.

The planned budgetary commitment is of the order of 23 billion dirhams, which would be covered by the General State Budget, whose financial mobilization effort would be broken down into: a share from the State budget, tax revenues earmarked for the financing of social protection, resources available as a result of the compensation reform, donations and bequests, as well as all other resources that may be mobilized by virtue of legislative or regulatory texts in force or to be considered.

The remaining 28 billion dirhams would be covered by the affiliates' participatory contribution system.

In this wake, and for a sustainable mobilization of financial resources necessary for a better implementation of this project, the Finance Laws of 2021 and 2022 have put in place several provisions, including the introduction of the social solidarity contribution on profits and incomes which has mobilized about 5 billion dirhams in 2021, and about 6 billion dirhams in 2022, the establishment of the ICT on tires, the introduction of an ICT applicable to articles, appliances and equipment running on electricity, as well as an ICT applicable to electronic devices and batteries for vehicles.

These revenues were earmarked for the "Social Protection and Social Cohesion Support Fund". In order to make this scheme financially sustainable, the government is "currently considering the mobilization of new so-called additional tax revenues to ensure sustainable financing of this project".

The conclusion will lead us to deduce that the success of the building site of the social protection, remains tributary of the completion of other strategic projects, in the image of the governance and the financing (theater of the present article), without forgetting also the reform of the sector of the health and the fiscal one mainly its social fringe (next article).

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