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Government social protection programme spending and household welfare in Lesotho

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Listed:
  • Joachim Boko
  • Dhushyanth Raju
  • Stephen D. Younger

Abstract

Lesotho has notably high levels of poverty and inequality despite a high level of government spending on social protection programmes. We assess the performance of this spending in reducing consumption poverty and inequality, applying benefit incidence and microsimulation methods to 2017/2018 household survey data. We investigate the distributional effects of actual spending as well as those of a hypothetical alternative in which the spending is targeted through a proxy means test (PMT) formula used by the government for some programmes. We find that government spending on social protection programmes in Lesotho substantially reduces poverty and inequality. For most programmes, the hypothetical alternative of targeting spending to poorer households through the government's PMT formula would have no better distributional effects than current programme spending. The exception is postsecondary education bursaries, which are costly and regressive. Retaining bursaries only for poorer students, and reallocating the outlay this saves to a transfer targeted to poorer households through the government's PMT formula, could reduce poverty and inequality significantly.

Suggested Citation

  • Joachim Boko & Dhushyanth Raju & Stephen D. Younger, 2023. "Government social protection programme spending and household welfare in Lesotho," South African Journal of Economics, Economic Society of South Africa, vol. 91(3), pages 375-393, September.
    • Handle: RePEc:bla:sajeco:v:91:y:2023:i:3:p:375-393
    DOI: 10.1111/saje.12341
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    References listed on IDEAS

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    3. World Bank, 2013. "Lesotho : A Safety Net to End Extreme Poverty," World Bank Publications - Reports 16650, The World Bank Group.
    4. Francois Bourguignon & Luiz A. Pereira da Silva, 2003. "The Impact of Economic Policies on Poverty and Income Distribution : Evaluation Techniques and Tools," World Bank Publications - Books, The World Bank Group, number 15090.
    5. Ridder, Geert & Moffitt, Robert, 2007. "The Econometrics of Data Combination," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 75, Elsevier.
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