Coding Through Crisis: Building a Digital Social Protection System in Lebanon
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In 2019, Lebanon witnessed the start of one of the most severe socio-economic crises globally since the mid-nineteenth century, plunging many Lebanese into poverty.
Amid the hardships, a new hope emerged in 2021. The World Bank set up a $246 million social safety net (ESSN) program and the Government of Lebanon designed a registration platform for this program, with the help of Siren Associates, called DAEM (Arabic for "support"). Built in record time, DAEM is more than just a registry; it’s a fully localized social protection system that provides a lifeline to Lebanese families hit by crisis.
In this episode, we hear from the Government of Lebanon, CGAP, the World Bank, and Siren Associates about how collaboration was key to DAEM’s success and how, even in the most challenging conditions, it’s possible to design solutions that go beyond emergency relief and sow the seeds for a more inclusive financial system.
This is Season 2, Episode 6 of CGAP's podcast, Inclusive Finance Frontiers.
Featured Voices
- Ahmed Fatih Ortakaya, Senior Social Protection Specialist, World Bank
- Carole Alsharabati, Research Director, SIREN Associates
- Marie Louise Abou Jaoudeh, Presidency of the Council of Ministers (PCM) of the Government of Lebanon
- Nadine Chehade, Senior Financial Sector Specialist, World Bank
- Souraya Sbeih, Consultant, CGAP
Listen and subscribe for free on your favorite platform. To learn more, visit www.cgap.org. To share feedback, connect with us at podcast@cgap.org.
This episode incorporates a news report from PBS NewsHour, Financial crisis leads some in Lebanon to rob banks to access their money.
Transcript
Carole Alsharabati: What has guided us is one principle, is make it happen. The team worked double the time. There was no weekend, there were white nights. There were people who stayed up 48 hours in a row. But they were all very motivated, because they knew that behind every line of code, there were families, there were women, there were children, there were vulnerable groups, there were elderly people. So the motivation was very high, and people were very committed to the delivery.
Lamis Daoud: Lebanon has gone through its fair share of crises in recent years.
In 2019, it witnessed the start of an economic crisis that was so bad that the world bank ranked it among the most severe crises episodes globally since the mid-nineteenth century. The hardships endured by Lebanese only got more intense in the years that followed and social safety nets became a necessity.
Hello and welcome to Inclusive Finance Frontiers, a podcast by CGAP. I’m your host, Lamis Daoud.
Let’s start off with some helpful context.
In 2019, the Government of Lebanon defaulted on foreign debt, dollars dried up and banks didn’t have enough cash to pay depositors waiting in lines outside their branches, and so… they closed their doors.
March of 2020 comes and the Covid-19 pandemic hits, exacerbating already existing problems. And then, in august 2020, the Beirut port blast devastated the nation further. These shocks plunged many Lebanese into poverty.
[News report from PBS NewsHour, Financial crisis leads some in Lebanon to rob banks to access their money.]
Lebanon had a national poverty targeting program, donor-financed, but it only covered a small portion of the population. So, in late 2020, the world bank presented a plan to extend the coverage of this program. It set up a $246 million social safety net project to provide cash transfers and access to social services to people identified as living below the extreme poverty line.
Social safety nets are programs used around the world to help individuals manage shocks and protect families from poverty, including through financial tools such as health and unemployment insurance and through cash transfers. These programs frequently offer a first experience with formal financial services, and they can provide an important on-ramp to financial inclusion.
The problem was the government of Lebanon did not have some of the key building blocks in place for the implementation of such safety nets. For example, there was no national, unified information system, known as a social registry, that keeps updated, verified info on the welfare of households. Such social registries are common around the world and act as a way for people to apply for various social programs.
Enter DAEM: Lebanon’s digital social safety net system, a silver lining in the Lebanon story amidst the doom and gloom. DAEM is Arabic for “support.” It was built top to bottom by Lebanese… for Lebanese to help get families the money and support they need to keep going. For many Lebanese families, the DAEM system has been a lifeline, providing not just financial support but also a sense of hope.
Today, the recipients of the national poverty program have successfully migrated to the emergency social safety net program – or ESSN for short. through DAEM, ESSN now reaches over 165,000 Lebanese families, that is more than double the number of families that were included in the national poverty program. DAEM is also being used now to support families impacted by conflict and is even by different governmental institutions.
We spoke to a variety of experts to find out how DAEM came to be, the challenges faced in setting it up, and how the country is planning on building off of DAEM’s success.
Marie Louise Abou Jaoudeh is the project director for the ESSN program.
Marie Louise Abou Jaoudeh: The social protection program in Lebanon aims to provide assistance and support to vulnerable populations, especially those facing economic hardship, unemployment, disability, or other challenges. The ESSN started in an emergency. We had an economic crisis, and then the COVID, and the Lebanese government do not have the capacity and resources and the expertise to fully implement and manage a program like this, especially that it was needed to be implemented and to start disbursement really very fast, and the program is very complex.
Lamis Daoud: What made the program so complex was the capacity-building of the government, meaning the ability to build, resource and operate a local program successfully on an ongoing basis. Something that’s even more difficult to do amidst crisis.
Ahmet Fatih Ortakaya is a senior social protection specialist at the world bank. His work focuses on the middle east and north Africa, including Lebanon. We spoke to him to learn more about how social protection systems work… and what made Lebanon’s case so different.
Fatih Ortakaya: Our intentions from the first day is the established capacity at the government so that government doesn't depend on anybody, that includes a UN agency, even to the world bank except financing because the intention is to, as long as government has the capacity and to be delivered, it doesn't require any other external resources. That's the intention.
We thought this is the best way to proceed is to establish a registry that is owned by the government, hosted within the borders of the country where the system right now, DAEM social registry is hosted at the country's national telecom authority's data center.
Lamis Daoud: Local ownership and adaptability were high on the agenda, so they decided to build this system from scratch.
During covid, the Lebanese government hired a Beirut-based nonprofit, called Siren associates, which helped develop a national digital platform to distribute and track vaccinations to their citizens.
Siren’s approach strengthens organizational capacity and leverages technology to address barriers to social, political and economic inclusion.
Carole Alsharabati is the research director. She spoke to us about how Siren was tapped to model a digital social protection system following the success of their covid vaccination platform.
Carole Alsharabati: The idea is to deploy a system that was fully digitized from A to Z, just like we did for the vaccine. So the registration, the selection, then the payment, the cash transfer, the verification, the dashboard, et cetera. Everything was digitized. And we used the same framework, the same ecosystem, the same machines, the same security protection, the same data governance approach we used in the vaccine.
The journey was a wild journey, because in this part of the world, the decision-maker, they decide to build the system when they want to use it. So it's not like plan ahead, and they give you one year to think it, design it, roll it, pilot it, et cetera. No. It's like they want it right away. And this is not an off-the-shelf product. This is a product that needs to be conceived. And in a very difficult environment, where you have very little support, you don't have unique ID, you don't have digital ID, you don't have data governance, procedures or anything, or cybersecurity. So we had to rebuild all this and develop the system in a relatively very fast record time.
Lamis Daoud: And this was no easy task. The program was very difficult to develop. Lebanon does not have a process to leverage the national id of citizens as a unique identifier. On top of that, names in Arabic can be spelled in multiple ways and dates of birth are written in different formats, which could cause duplication errors in the registration phase.
But nothing stood in the way of Siren’s determination to tackle these and many other challenges. The team – made up of people with an average age of 25 – worked nonstop to make it happen.
Carole Alsharabati: What has guided us is one principle, is make it happen. So anytime we had something blocked, something slow, a decision not being made, or a law that doesn't exist, or I don't know, ID, digital ID, that doesn't exist, we had to invent something to make up. So it's a sprint where from the beginning you tell yourself, no matter what happened, I'm not going to stop. So I'll have to jump over any obstacle event, be creative, and make it up for anything that's missing, so that I make sure I get the exits. Make it happen. So this is a bit disparate on this project, and it's because it was in circumstances in the country where the administration was very weak.
The team worked double the time. There was no weekend, there were white nights. There were people who stayed up 48 hours in a row. But they were all very motivated, because they knew that behind every line of code, there were families, there were women, there were children, there were vulnerable groups, there were elderly people. So the motivation was very high, and people were very committed to the delivery.
Lamis Daoud: And they delivered. Quickly.
Once the digital infrastructure was built, it was immediately put into action to register impoverished Lebanese and get them the financial help they needed to withstand the economic crisis, according to Marie-Louise.
Marie Louise Abou Jaoudeh: We started registration in two months. We closed the registration. After 17 days we start the household visit. After less than one month we start the payment. The payment was gradually. So, we were disbursing to the beneficiary and developing the system.
Lamis Daoud: Thanks to the social protection information system that DAEM provides, families now have access to cash quickly, and without any of the social stigmas of waiting in line to get it. This increase in privacy is helpful for people to get the services that they need when they need them.
But can the program go one step further and potentially open the door for financial inclusion so that DAEM recipients can reap more long-term benefits?
We spoke with Souraya Sbeih, a senior financial sector consultant with CGAP. Her work focuses on financial inclusion, payment systems and regulation, and social protection systems.
Souraya Sbeih: Government to person payments or what we call G2P payments can be an important driver of financial inclusion as they often are the first experience with formal financial services for many recipients, for many low-income people.
Financial services can help people manage risk, they can help preserve the gains made in good times, and also they can help with rebuilding their lives after the crisis. All of this, of course, if financial services are designed to meet the needs of low-income people. So concretely, financial services can help you save, can help to safeguard financial assets sometimes, or to send money to family members or receive small grants or small loans and rebuild a business after a shock. Inclusive finance has a very important role to play in countries that are impacted by crisis or by conflict.
Lamis Daoud: According to the Organisation for Economic Co-Operation and Development, the OECD, three quarters of people living in extreme poverty live in countries affected by fragility or crisis. And by 2030, 86 percent of the world’s lowest income people are expected to be living in fragile countries. Many are financially excluded in such environments... Which makes reliable safety net programs so vital, as Souraya highlights.
Souraya Sbeih: This is why the example of Lebanon is so important. It shows that even in the context of a deep and complex crisis that happens over several years, building government capacity through a local partner like Siren can work. So we can build infrastructure that will set the stage for recipient choice and more broadly for financial inclusion outcomes.
Lamis Daoud: And other inclusion opportunities can also follow by building upon the digital safety net as it exists. Nadine Chehade is a senior financial sector specialist at the World Bank and formerly a CGAP colleague. Her work largely focuses on Lebanon, Jordan and Iraq, and on cash transfer programs, like DAEM.
Nadine Chehade: The idea down the line is to be able to disburse on accounts digitally, but also provide useful products on top of an account, which is where you're actually maximizing the benefits for the recipients. You're empowering them not only by preserving their privacy, etc., but by opening up the whole range of possibility that cash does not truly easily allow for. And I'm thinking of all sort of other products beyond micropayments, we're speaking microinsurance, micro-pensions, microcredit where it's relevant, et cetera. And this is how you actually maximize the financial inclusion benefits for the recipients beyond the program.
Lamis Daoud: So how are Siren and government agencies working to build on the momentum they have? Carole gave us a glimpse into how DAEM is being maximized and the inter-governmental connectivity it takes to make all that happen.
Carole Alsharabati: There has been a lot of effort put towards leveraging this platform to support education. It's been leveraged by the ministry of health, which has used the extremely poor family data to notify the household about the availability of cancer medication and other medical supports on the ministry of health.
So now you have Ministry of Social Affairs, Ministry of Education, Ministry of Public Health, that are connected on this platform, and you have the central inspection that has been reactivated as an audit institution. And that's a very interesting thing, because it does have a social inspector, it has an education inspector, it has a health inspector. So they have all been activated, because finally, they have data, they can audit what's going on. So we created this virtuous circle in the government in Lebanon that never existed, of connecting all these institutions, and creating these checks and balances between them, with data being accessible to every side on basis of what they need for them to be doing, and not being accessible for people who want to use it for the wrong reasons.
Lamis Daoud: The digital registry that DAEM extends can also be used to provide relief from shocks and stresses. Nadine gave us a very real example of how important that is.
Nadine Chehade: We know we're in a region that's going to be hit hard by climate. We're actually seeing it and living it where you have flash floods that didn't used to happen. And people finding themselves in the middle of a river or losing part of their homes in those elements, the sea rising, et cetera, all of those climate shocks are things that we're probably going to see more and more. And again, having a system that's resilient that is able to actually provide support to impacted people rapidly at scale is something that we have always missed.
If you think of Lebanon, port of Beirut blast, you actually needed the army to intervene and carry around suitcases of cash to compensate people. And we're speaking about an area of five kilometers radius around the port, maybe 20-kilometer radius. But if you're speaking of something like a natural disaster or a climate event that touches a larger population, before DAEM it would've been extremely difficult actually to reach out to people. And now, you have that system that allows you to do that. And for me as a Lebanese citizen as well, it's a fantastic thing to have.
Lamis Daoud: While Lebanon is still struggling to emerge from financial crisis, digital financial services are starting to pick up and the government and its partners are currently exploring the possibility of disbursing DAEM benefits on accounts offered by banks or non-banks, according to Nadine.
Nadine Chehade: That's obviously a very specific challenge in the middle of a historic financial crisis and in a country where there's essentially no trust in banks anymore. [00:08:00] but one cash has its costs, be it for financial service provider like the physical liquidity management that comes around it, for the program itself to actually get in touch with the providers to arrange for the disbursements in cash, or for the recipients, the actual transportation time and the opportunity costs to actually go wait in line and cash out.
I'd like to emphasize the privacy of receiving support but not necessarily being stigmatized because of it and not necessarily being seen as someone who's living out of stipends is something that's very important, at least in the Lebanese culture. And so, we do believe that that might play a role in actually in people choosing to receive their benefits on accounts. So we're doing this study right now, we're having quite some positive, very preliminary results. It will continue in the coming months.
Lamis Daoud: Fatih tells us that the registry’s modular design was devised in a way that each part can work independently but also fit together seamlessly, like building blocks. And that the registry came together in record time.
Fatih Ortakaya: This project was an emergency project and government has to launch something from scratch. While we are working with the company that is developing the software, we were making the design, it's a modular design and government established the intake and registry model and within two months of time, government managed to register half of the population. Starting from registration until the delivery of the payments, it took only four months. If Lebanon can do it within four months, the large-scale program from scratch, all other countries can do that.
Lamis Daoud: It is an inspiring effort of dedication, foresight, and more importantly, successful execution that involved many actors including the government of Lebanon, the Ministry of Social Affairs, the World Bank, the World Food Programme and Siren Associates. It is also helping rebuild trust between the government… and its citizens.
Marie Louise Abou Jaoudeh: Within this program we are building trust between, first of all, people, the Lebanese families that are benefiting from this program, and the government. This is one of the successful social project programs in Lebanon, because in two years we ended up with 93,600 families benefiting.
Right now, we have a strong and robust system that we need to really continue developing and building the blocks on it, and have it as a system where everybody will trust,
Lamis Daoud: And trust is often the byproduct of a program designed to be fit for purpose, which Carole says is the secret to DAEM's success.
Carole Alsharabati: When you bring the models from abroad, they don't fit. You cannot just copy-paste models that come from abroad and then push them in local country. You need to adapt to the circumstances, the challenges, the difficulties, the opportunities, the power, the strengths, the weaknesses, and the people, and the culture, and everything. You need to have locals who are fighting for their teeth, because also they believe in this change. And you also need local partners to be connected to this project. All these reasons make very important that change comes from within.
Lamis Daoud: That’s the end of our podcast today. Thank you for joining me. I’d also like to thank our guests: Marie-Louise, Carole, Nadine, Fatih and Souraya.
From CGAP, I'm your host, Lamis Daoud.
For more information on our work in inclusive finance in fragile countries and other topics, visit our website at cgap.org.
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