These turbulent times strengthen the case for social protection – when there’s so much precarity, a solid floor is all the more important. And it’s clearer than ever that we can’t dodge the difficult questions: how do we deliver on global social protection promises in places where crises are the norm, not the exception? And what’s the place of international aid in supporting national solutions?
Our new report, Financing Social Protection in Protracted Crises, offers evidence to face these dilemmas. It challenges the development sector to move beyond headline pledges and grapple with the reality of financing social protection in countries affected by a mix of long-term political instability, conflict, and repeated shocks – “protracted crisis countries” (PCCs).
At the heart of this is not just how much money is available, but how financing works – and who it works for. Here are our five takeaways:
1) Financing was on the rise: but unevenly
Between 2018 and 2023 (the latest year we have data for), official development financing (ODF) for social protection in PCCs more than quadrupled – from just under US$1 billion to nearly US$5 billion. This looks like a remarkable growth story and a concerted focus on PCCs.
Yet look more closely and a patchy picture emerges. First, support is unevenly spread: most of the recent rise was due to a handful of large allocations to a few countries, most notably Ukraine. The money tends to go to a few countries with ‘engaged’ donor relations, and national social protection systems in place. Second, the lion’s share of this funding came from a single actor: the World Bank, which accounted for nearly three-quarters of total ODF to PCCs. At a time when bilateral aid is in decline and shifts may be afoot at the Bank, such concentration is risky. And third, the share of ODF spent on social protection is dwarfed by that spent on humanitarian aid, or on comparably costed SDGs such as health or education.
2) A financing gap: and tightening purse-strings
Despite recent increases, financing remains far below what’s needed. The ILO estimates a staggering US$322.8 billion annual gap in financing social protection across low- and lower-middle-income countries. And coverage is topsy-turvy to need: in high-income countries, 86 per cent of people receive at least one social protection benefit. In low-income countries, that figure drops to just 10%.
This shortfall comes at a tough time. As we’ll explore in our next blog, even before the brutal aid cuts of 2025, political and fiscal pressures were bearing down on the space to support social protection. In this context, the mood music ahead of this month’s Financing For Development conference is less ‘how do we drum up more ODF for social protection?’ and more ‘where else do we look and how do we do better with what’s still out there?’.
3) Grants, Loans, and Debt: Concessionality matters
Adding to the debt burden of countries facing crisis is obviously problematic. So it was encouraging that our analysis showed social protection finance for PCCs was more likely to come in the form of grants, compared to other countries (46 per cent in PCCs compared to 16 per cent elsewhere).
But there’s a countertrend: a rising use of high-interest loans (OOFs), in middle-income PCCs. We know that servicing high levels of debt can crowd out government spending on social protection, especially under the economic strain of crises. So any lending must be judicious, and debt relief has to feature high on the financing agenda.
4) Who Gets the Money – And How?
A striking 83 per cent of ODF for social protection in PCCs appears to flow through national governments – largely because that’s the preferred channel for the World Bank. But many PCCs are characterised by weak, transitional, or contested governments. In fact, over our five-year study period, World Bank support to governments was suspended at some point in seven out of the 27 PCCs we studied.
Rigid channels can be financing sink-holes in politically volatile settings. When paying governments becomes non-viable, any delays in redirecting funds can leave vulnerable populations without support just when they need it most. Models exist for more agile, responsive financing in these circumstances. But they need to be institutionalised, not improvised. Multi-track approaches that support both state and non-state systems, along with pre-agreed contingency plans, should be the norm, not the exception.
5) Fragmentation and opacity: the case for connections
Counting and tracking ODF for social protection, let alone national government budgets, is remarkably difficult. Financial reporting is – as we’ll detail in a follow-up paper – out of date, full records are hard to find even for high profile programmes, and the array of financing mechanisms can be bewildering. Add to this the sheer number of transactions – between 2018 and 2022, there were at least 1,176 unique donor-implementer combinations delivering ODF for social protection in the 27 PCCs, three-quarters of which were for less than US$1 million – and we have a story of fragmentation, inefficiency, and lost opportunities for scale.
Despite years of commitments to bridge the humanitarian-development divide and investments in connecting cash and social protection, we still see that short-term humanitarian cash outnumbers social protection investments in most PCCs. Indeed, new figures from the Global Humanitarian Assistance report (due to be released next week) are likely to reveal just how great the gap is between humanitarian and development support in PCCs. As the international humanitarian system faces its own financial reckoning and is likely to retreat from ‘nexus’ to ‘life-saving’ mode, donors will need to ensure the space for connection between emergency aid and sustained social protection is not lost.
Toward Smarter Social Protection Finance
To draw out important differences between PCCs, our research distinguished between politically estranged, transitional and engaged contexts. But the ‘no one size’ truism still holds: each protracted crisis country presents its own changeable political, economic, and institutional puzzle. The line of approach is therefore clear: we need national social protection financing plans that are conflict-sensitive, forward-looking, and firmly embedded within a country’s broader risk, resilience, and climate strategies.
As budgets decline, political space retreats, and poly-crises multiply, the development sector faces a choice around meeting its social protection promises. It can retreat into a shrunken version of old models. Or it can use this critical inflection point in the international aid architecture to double down on smarter, more coordinated financing that supports real systems to be built and sustains them through crisis.
For people living in protracted crisis, social protection is not a luxury for times of fiscal plenty – it’s a lifeline in times of economic distress. How we choose to finance it now will shape whether those lifelines hold, or fray, in the years to come.
This IDS opinion was written by Sophia Swithern (independent consultant) lead author of the BASIC Working Paper Financing Social Protection in Protracted Crises.
The full report will be launched at a webinar on Thursday 12 June – register here.
