Improving Social Assistance and Pensions in Azerbaijan

Published: Wed, 09 Sep 2009 18:56:39 GMT

Azerbaijan is a small, landlocked country of 8.6 million people, whose per-person income is about US$2,550, below the average of its neighbors in East Central Asia. For a long time, the country lacked an effective program to provide income support to very poor households. Existing social assistance programs were fragmented, not well targeted, and their impact on poverty was negligible. The pension and social assistance administration was extremely weak, with poor record keeping, manually performed business processes, outdated systems, and non-transparent decision-making. As a result, Azerbaijan’s social assistance programs were inefficient, characterized by an ineffective use of resources.


The IDA-financed Pension and Social Assistance Project was launched in 2004 to introduce a targeted social assistance program, including design and implementation arrangements, full automation of business processes, electronic data exchange and management in real time, electronic delivery of benefits, and comprehensive capacity building. For pensions, the approach was to reorganize business and decision-making processes and automate them in every office of the country, implement a client information system, and build staff capacity.




A targeted social assistance (TSA) program, introduced in 2006, reached 165,461 households with almost 760,000 members (9.2 percent of the population) by 2009.

Highlights:
- Excellent targeting. According to a monitoring survey of 2008, one half of all recipients come from the poorest 10 percent of the population indicating an excellent degree of targeting.

- Technology created efficiency. All local TSA offices (84 of them, covering the entire country) are now using adequate up-to-date technologies and most of them have a real-time connection with the Ministry’s central office and the TSA central database. Almost all beneficiaries received their benefits using ATMs.

- Technology helped policy-making. A centralized database of all applicants and project beneficiaries was developed, facilitating transparent policy-making. The database comprises comprehensive socioeconomic indicators enabling real-time updates of applicants, beneficiaries, and budget resources required to run the program.

- Pension systems fully computerized as well. The records for all 1.3 pensioners were computerized. This central automated registry includes: individual contributors, a registry of employers, a modern archive system, and a fully automated business back-end that handles human resources, accounting and collections.

- Pensions more reliable. Pensions are paid monthly (there are no arrears) and have increased significantly in real terms. According to several sources including a TSA survey, State Statistical Committee, reports of the Ministry of Economic Development and a Poverty Assessment, they have significantly contributed to poverty reduction.

- Information improved. Information on the Social Protection Fund’s activities became widely accessible via an outreach campaign related to the introduction of individual records, social insurance cards, and new links between benefits and contributions. The outreach campaign included a free weekly newspaper, “Pension,” as well as an interactive website which provides information about social insurance in Azerbaijan (www.sspf.gov.az).


The Pension and Social Assistance Project was launched in 2004. The total project cost was US$13 million, of which IDA contributed US$10 million and the government US$3 million. The project team has provided valuable technical guidance to policy-makers and staff involved in implementation.


The International Labour Organization helped the authorities prepare for implementation of the social assistance component. The United Nations Development Programme assisted in the preparation and implementation of the pension component.



Building on the Pension and Social Assistance Project, the Azerbaijan Social Protection Development Project launched in mid-2008, with a contribution from IDA of US$26.7 million. The project focuses on institutional development, service delivery, labor market policies, human resource capacity, and maintaining high-quality targeting. The project also aims to further improve the pension system.


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