Social Safety Nets: How Cash Subsidies May Serve as a Social Intervention #Tunisia

Another version of this article “Driving their Own Destiny” appeared in The Majalla for the SIROCCO blog.  Sirocco Blog is inspired by the Mediterranean wind whipped up in the Sahara and blown across the Maghreb region. In North Africa, it is known by its Arabic name, qibli. ‘Sirocco’ provides a blow-by-blow account of events occurring in the Arabic-speaking countries west of Egypt.

A civil society program in Tunisia offers employment opportunities to the country’s youth [Click here for the article version written for The Majalla.]

By: Mehrunisa Qayyum

Abdallah applied for a chauffer job in Tunisia, where an estimated 15 percent live below the poverty line. Although Abdallah completed his driving school training, the company decided to employ him as a security guard, which pays more.  Earlier, the company refused his job application–twice.  This time, the company believed that Abdullah was responsible enough because he completed a program subsidized by a non-profit called Almadanya.  Abdallah’s driver’s license signified self-discipline.  As Tunisia reconfigures its subsidy structure to better target the poor, civil society organizations, like Almadanya, offer its own type of social intervention to target poor youth trying to become “employable”.

The Tunisian government offers subsidies as part of the ‘social safety net’ (SSN).  Although Tunisia is an upper-middle income country, Tunisians, regardless of income, may receive subsidies for diesel, cooking oil, sugar, and bread/flour.  Tunisia’s case highlights the macro-problem faced by many other countries in the Middle East & North Africa region.  In Tunisia’s case, its widespread subsidy coverage shifts funds away from other social development programs.  Meanwhile Tunisia’s budget deficit has grown by 12.6 percent since its 2011 revolution.  Consequently, both the World Bank and the International Monetary Fund have repeatedly advised Middle East & North African countries, like Tunisia, to scale back such subsidies and target the poor more effectively because the current system is not financially sustainable.

In fact, last month, the World Bank held a special panel reviewing the social safety net problem by exploring Morocco, Egypt, Palestine, Jordan, and Tunisia as case studies and considering the MENA SPEAKS survey conducted by Gallup.  Regardless of the positive impact informal social safety networks provide, government subsidies, even if targeted more directly towards the poor, will not suffice for two reasons.  One, Tunisia’s budget deficit has grown by 12.6 percent since its 2011 revolution.  Two, persistent unemployment requires programs that go beyond food assistance, a forthcoming IMF loan, and raising state-controlled prices, as with milk earlier this year.

Unreformed SSN programs fail to provide enough coverage for Tunisia’s poor.
Given the need for SSN reform, one of the World Bank’s key recommendations stated that cash transfers work better than in-kind transfers.  Cash transfers serve as a tool to remedy SSN programs.  Still, government subsidies are not enough.  NGOs may offer social interventions that consider long-term concerns, like obtaining the skills and tools for a job–or “employability”.

To address employablity,  Almadanya implemented a cash subsidy model that targets unemployed youth across four provinces.  Founded in 2011 by expatriate businessman, Lotfi Maktouf, Almadanya subsidizes the driver’s licenses for unemployed youth through its program “Licence to Dream”.

Maktouf relates how a country-wide program needed to target unemployed youth, whether they lived in an urban or rural environment.  After reviewing eight citizen empowerment programs, Maktouf observed that there was a high demand for driving instruction.  Even working in the agricultural sector requires the ability to drive a tractor, and thereby, a driver’s license.

Although driving is an easy skill to acquire, there are some institutional barriers in obtaining driver’s licenses.  For example, Tunisians cannot obtain a license without attending a driving school, which adds to the financial burden of lower-income families.  Those seeking driver’s licenses must complete a certain number of hours with a driving school before taking the driver’s test.  Consequently, the inability to acquire driver’s licenses further limits opportunities for unemployed youth.

Maktouf asserts that, “it costs three times the minimum wage to get the driver’s license.”  Such a requirement poses a financial burden on lower income families.  Maktouf addressed the financial burden by meeting with the driving schools and negotiated the fees from 850 dinars down to 390 dinars to make the fee more afforadable for lower-income students.  Essentially, “Licence to Drive” funds the instruction fee.

“Licence to Dream” follows a few program guidelines:

  1. The participant must be young and unemployed.
  2. The participant must attend each class or will be dismissed.
  3. The program requires that half of the participants be female.

After the participant qualifies, Almadanya requires him to match the program’s effort: he must pay the government stamp fee of 50 dinars.  The program reimburses him only after completing the program.  The 50 dinar deposit operates as the incentive for the participants to commit to one-hundred percent attendance.  “We step in after they take the first step…participants need to have skin in the game, or they will not take attendance seriously,” emphasizes Lotfi.

Maktouf believes the mutual commitment explains why “Licence to Dream” has achieved a 99 percent success rate through its cash subsidy model.  Today, 95 percent of licensed participants found a job.

The rules are strictly enforced.  As Maktouf explains, “No exceptions have been made–even when a mother insisted on meeting with the program’s Tunis manager and brought a local official.”

The inclination to involve public officials and dissaude the program from following its guidelines did not suprise Maktouf.  His program’s response to the public official symbolizes how a social intervention resisted the tendency for offline politics to interfere with a program’s mission.  If offline politics overrule the program’s practices, which were founded on accountability and self-discipline, then both the program and the mission suffer.  “By overruling my staff at the local level, I have not only demoralized them, but I have also undercut the program’s grass-roots philosophy,” says Maktouf.  Since that instance, no participant has missed a class in two years.

Almadanya employs twenty-five staff members and twenty-five volunteers.  Despite a successful track record, Almadanya still relies on its founder’s funding.

Critics argue that “Licence to Drive” does not address the persistent problem of employing youth with university degrees–especially if they come from middle-income families.  Tunisia’s unemployment stands at 16.7 percent, which is higher than its pre-revolution rate of 13 percent.  Unemployment remains highest among 18 to 34-year olds with university degrees in Tunisia.  Middle-income families make up about 40 percent of the population.  Moreover, the “skills mismatch” in the economy prevails in Tunisia where educated labor is needed to work in the electronic and mechanical industries–key fields in attracting more foreign direct investment.

Moving forward, Almadanya will expand into a fifth province, Jendouba,  to subsidize the costs for 1,470 participants becauase its track record attracted the support of local Tunisian bank: Banque Nationale Agricole.   In 2007, Jendouba represented the highest unemployment rate–24.5 percent— compared to Tunisia’s other nine governates.  Historically, the Northwest and Western provinces of Tunisia represented higher rates of poverty, according to Mongi Boughzala.  Thus, the Jenouba governate’s attempt to catch up may succeed in with Almadanya’s cash subsidies, a type social intervention that has drawn positive attention in Morocco’s cash-transfer program to increase primary school enrollment rates in rural areas — a Millenium Development Goal.

The fastest way to empower young people to get a job is to equip them with the skills and a form of identification that validates her identity as a Tunisian citizen.  “Now they have an ID other than what is imposed by the state, which shows that they have earned it through their own efforts–an added value,” believes Maktouf.  If anything, his social intervention may serve as the intermediary step for those in the lower socio-economic bracket trying to participate in the formal economy, which requires government issued identification.

“Licence to Dream” is a social intervention that mirrors the World Bank’s findings on the cash subsidy recommendation.  After two years, the program’s results hint at what long-term impact means: funding social interventions that increase a young person’s “employability” by facilitating a driver’s license–not necessarily a university degree in engineering.

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