Proposals to accelerate the establishment of social security systems in low-income
countries have gathered strength in the early years of the millennium. These proposals are
being subjected to searching questions. One major question concerns
“affordability” - with which this chapter seeks to deal.
Social security has recurrently been perceived as a luxury that only rich countries can
afford. This view has recently been challenged from different angles. From an economic
perspective, it is increasingly recognized that pro-growth and pro-poor policies are
inseparable and mutually reinforcing also in developing countries (e.g. OECD, 2006;
ILO, 2006). The lack of social security mechanisms in many developing countries
exacerbates the vulnerability of the population against economic shocks and the
vicissitudes of the life course, such as sickness, old age, disability or maternity. This is
again strongly reconfirmed during the times of economic crisis like the one started in
2008. If no protection mechanisms exist, these contingencies create poverty traps from
which poor households are unlikely to escape quickly. Lack of basic income security
prevents men and women from engaging in productive economic activity (always
associated with risk) and forces them to focus just on survival.