Daniel Gomez — How Colombia accelerated the expansion of its social safety net

The Innovation Dividend Podcast, EP 6

The Innovation Dividend explores how innovation in society and government are paying off. Over the coming weeks, we’ll be exploring how ‘policy frontliners’ are innovating in real time in the COVID-19 pandemic and asking which of these changes and “raw learnings” might become part of our new normal. You can see the backstory by Kal Joffres here, Podcast EP 1, Podcast EP2, Podcast EP3, Podcast EP4 and Podcast EP5.

Daniel Gomez Gaviria, Vice Minister of Planning in Colombia, tells us about the unprecedented expansion of Colombia’s social welfare programmes (powered by the SISBEN information system), and how it is reaching out to the hardest-to-reach — including those without bank accounts. We also hear an uncommon perspective on global trade and supply chains that runs counter to what many other countries are doing and how the pandemic might affect Colombia’s meeting culture long after it has subsided. This conversation was recorded May 15, 2020.

• You can subscribe to the podcast on Spotify or Apple.

[00:00:00] Daniel Gomez: More in this time of pandemic, citizens are on top of every single thing that the government does and says. Being an effective policymaker, it’s not enough to be good technically to have PhDs, to have Master’s degrees, to have technical training. You really have to incorporate the communications strategy into policy making from the beginning to have a successful policy.

[00:00:26] Milica Begovic: Hi and welcome to The Innovation Dividend, the podcast that explores how innovation in society and government are paying off. I am Milica Begovic.

[00:00:36] Kal Joffres: And I’m Kal Joffres. Over the past few weeks, we’ve been exploring how the COVID-19 pandemic is unleashing some interesting and unexpected sources of innovation around the world. Today, we speak with Daniel Gomez Gaviria, Vice Minister of Planning in Colombia.

[00:00:49] Milica Begovic: We hear about a social welfare program designed by the Department for National Planning or DNP and powered by the Information System that in response to the pandemic, onboarded 3.5 million newly needy households in two weeks, creative outreach methods to identify those families who are most difficult to reach and a perspective on trade policy than runs counter to what many other countries are doing right now to secure their supply chains.

[00:01:15] Kal Joffres: Vice Minister Daniel, welcome to the podcast.

[00:01:18] Daniel Gomez: Okay, thank you very much!

[00:01:19] Milica Begovic: Daniel, Colombia has an assistance program for cash transfers and social programs for about 10.5 million households that has operated for about seven years.

[00:01:28] The pandemic strikes pushing far more households into poverty. What does your ministry do in response to this?

[00:01:35] Daniel Gomez: The main challenge in the early stages of the pandemic and it still is to protect, one, the income of households; two, protect to the productive sector firms; and three, protect the macro economy. This is to mitigate the impact of containment policies and health policies.

[00:01:57] Our first approach was wanting to understand the scope and the magnitude of the problem we were facing. Initial estimates that we did at the DNP together with the World Bank indicated that in the absence of any policy, poverty levels could increase by nine percentage points.

[00:02:18] Nine percentage points increasing poverty means that we would be going back 10 years in terms of social progress. So this obviously meant that we had to do something in terms of social policy and the protection of incomes of the poor and the vulnerable. Here in the Colombian social policy has been fairly successful in reaching the poor. Those are categorized by the SISBEN, our information system, as extreme poor or poor, but we didn’t cover all these people who would lose their income very easily and fall into poverty.

[00:02:58] So we did two things. We decided to accelerate the program to reach one million households. This program is a permanent program that returns value added tax to the poorest households. So it’s the poorest of the poor who receive every two months a compensation of 75,000 pesos to reduce the regressivity of the, of the value added tax.

[00:03:26] So that was the first policy that we implemented to support incomes for the poor. The second policy was Ingreso Solidario. Ingreso Solidario was designed to, to reach three million households. We used all our best information from SISBEN, so 21,000 records there were up to date during the last year. So they were surveys conducted to put up to date our database during the last year. And we complemented these 21 million records with 18 million records from the current survey that were up to date after June 2018. So with this big database, we, we started to vocalize it, to identify those households in extreme poverty, poverty, and vulnerability that had no coverage and no help from any of the social programs in Colombia.

[00:04:24] So those households that did not have Familias en Acción. Familias en Acción, the conditional cash transfers. VAT compensation, or Colombia Major, the cash transfer program for elderly Colombians. So this is how we started thinking about it. We, we thought that this should be on income support that would help households not to fall into poverty. So it was not a meant to be an income that would keep them out of poverty in the long term.

[00:05:00] It’s a temporary program that is meant to cover basic needs during the quarantine period, helping households observe those measures and protect their health.

[00:05:12] Milica Begovic: Just by listening to you, there is so much that has gone into this program, and I’m specifically referring to SISBEN. I’m interested, how long did it take you to put together this response from the point where it was an idea to the point where money was going into people’s bank accounts, and I’m talking specifically about the part where you started providing support, additional 3.5 million of newly needy households.

[00:05:35] Daniel Gomez: From the moment we started thinking about this to the moment we disbursed to 1.2 million households that had some type of bank account. It took us about two weeks and a half — two weeks, three weeks. So this was really fast. It was joint work between the National Planning Department, the Ministry of Finance, the Social Protection Department, the Banca de las Oportunidades, our units that focuses on financial inclusion and education in particular.

[00:06:11] And, and of course with those port always of the people at the presidency. So it took us three weeks to reach 1.2 million households. I just want to put this in context and compare it with the Familias en Acción, our conditional class transfers for households with kids. This program took. It took us about 10 years to reach 1 million households with this program. So in three weeks, we managed to reach it more than we had reached with these programs in 10 years.

[00:06:44] Kal Joffres: What did you do or how did you change some of your ways of working to achieve that compression in that timeline?

[00:06:51]Daniel Gomez: The normal process of having to publicize, publish decrees for commentary discussed them with, with Congress in a lengthy process. I think that here processes have been shorter. They’ve not been eliminated at all, but they have been shortened and streamlined.

[00:07:09] But at the same time, I think that we have discovered things that were there all the time. So for instance, at the National Planning Department and in governments in general, we had access to tools like Microsoft Teams and all these virtual meeting type of tools, but we never used them. We always had to convene a meeting where everyone had to cross the city to convene, meet. We would have at least five coffees each. This culture of like drinking coffee in meetings and that it makes meetings very long and not very effective, right. I think that in, in this emergency, we’ve seen that we can work virtually. We can work much more effectively, not only governments, but in general, I think that the whole digital transformation of society has been astounded, accelerated — we have had to find ways to work with these constraints. And these ways of working are showing that we can be a lot more efficient, and those are part of the things that I think will need to be consolidated with towards the future.

[00:08:17] Kal Joffres: Do you think you’ll go back to five coffees after the COVID-19 pandemic?

[00:08:22] Daniel Gomez: That is a really good question. And I, I think that we will, unfortunately, I’m not sure. I’m not sure. I think, I think that there will be a lot of forces that will tend to, to bring us back there, but, but, but I was thinking about this recently with it, with the team of, of, modernization at the DNP, and the team has been reflecting on this and analyzing these things and seeing how we can prevent those things from going back.

[00:08:51] And I think that in part the culture of of meeting is due — and this is a hypothesis, willing to discuss it — but I think it’s due in part to, to low social capital, right? So we, we, we feel that if we don’t meet, shake hands, and if we’re not face-to-face, there will be no commitment to whatever we agree, right.

[00:09:15] But, but I think that we’ve learned that, that at meetings, over the phone meetings while we’re video conference, are as binding as in person meetings, they are equivalent in substance. So maybe this will change and maybe we are building this social capital where we, where we trust that whoever is on the other side of the screen is actually paying attention, participating actively in the meeting.

[00:09:41] And that whatever we say in the meeting is, if it’s an agreement that has to be honored. So I think that there are lots of interesting transformations going on that will be valuable in the future. Those are kind of the behavioural ones, but, but also all these transformations, in terms of our use of data, of databases, of technology, of our sense of urgency in terms of modernizing a lot of our policies.

[00:10:09] Milica Begovic: So I think Kal’s question about the coffee was really a trick question to ask of somebody who lives and works in Colombia. Of course, you feel compelled to, to protect coffee, Daniel. Colombian coffee, no less. So I’m going to take that with a grain of salt, but I do want to follow up on what you just said, I’m curious to know what are some of the examples of these transformations that you’re seeing right now?

[00:10:29] How has the pandemic really prompted maybe some other government programs to run differently. Could you give us one or two examples as to what is happening right now?

[00:10:38] Daniel Gomez: There will be a big discussion in terms of universalisation of social policy, versus conditionality and focalization and that’s a big, big, big area of focus. I think those programs have been transformed in part with new tools.

[00:10:54] So what, so for instance, Familias en Acción in the way that program works instead we built a list of for potential beneficiaries, and then we used to hold these huge meetings in local stadiums in local, local town halls where there were hundreds of people would be in a meeting. They would have to line up, present their documents, their IDs.

[00:11:25] Go through all the process of photocopying their government-issued ID, with enlargement of 150%. That’s a common joke here in Colombia. It’s not a joke. You actually have to do that for most government processes, but that’s the level of, of a bureaucracy involved.

[00:11:44] The processes were very slow and required people to be actually sitting in rooms for hours and hours. We’ve seen that with this program. We can do things differently. And I think that, that, that will transform social policy as well. In terms of our policies for the productive sector, I think that we will speed up our process of diversifying our production systems and our export baskets.

[00:12:14] So we’ve seen that a fall in commodity prices is uncompared to anything we’ve seen before the fall in the international trade. The need to keep trade open to respond to, to the pandemic in terms of the inputs. The intermediate inputs, capital goods that we need to import has been made pretty, pretty obvious. We’ve seen it in agriculture as well, how a whole bunch of, of inputs for agriculture, production for food production are imported.

[00:12:50] And, and how, it, the whole agricultural sector, it can increase productivity by using these inputs better. So we’ve had a big movement now of reducing tariffs on all these intermediate inputs that are used by our agricultural sector for instance. So I think the trade policy is also being transformed and we will need to rethink our trade policy in terms of how, we can better integrate into all these global value chains, how we can protect supply chains.

[00:13:25] Which is very different from, from, from, imposing protectionist policies and protecting local producers, but how to protect production more broadly and to consumers with that production. So I think that all of these topics are have been transformed, within this last month, all these committees that decide, decide on tariffs. Decide taxes, decide emergency measures are measures that many of them should be measures that are kept for the longer term.

[00:13:56] Kal Joffres: This is very interesting because in an environment where many countries are thinking about onshoring production, it sounds like you’re thinking about how do we better integrate ourselves into the global supply chain. Can you tell me about your thinking behind that?

[00:14:11] Daniel Gomez: Sure. So I know that there’s been a tendency and a worldwide reaction to, to, for instance, restrict exports to protect the supply of medical supplies for instance in Europe. That was one of the broad reactions of many countries. What my thinking is that if we think in terms of the world and more in terms of global citizenry — protecting trade and protecting our global supply chain set is the best way for all of us collectively to protect our access to medical supplies, to health supplies, to food supplies. Because we know that all of these supply chains require inputs that are sourced globally. So it may be if, if you’re Germany and you have a 90% of inputs that go into health supplies.

[00:15:04] Maybe you can close off your borders and you won’t suffer too much and you can replace those 10% of the inputs that are missing. But if you’re most of the world, where you contributed one small input into these global production chains and the supply of all these final products, it makes a lot more sense to remain open and to source it from the cheapest place possible from the best place possible, whatever inputs you need.

[00:15:36] So I think that even if we’re, we’re facing kind of a prisoner’s dilemma here where the dominant strategy from laterally may be in for some countries, maybe for many countries to close trade. The superior strategy collectively is to protect global supply chains and keep them open.

[00:15:59] Kal Joffres: Coming back to the SISBEN social welfare program, could you tell us about some of the things that you’re doing to reach out to some of the most challenging people to reach in society?

[00:16:08] Daniel Gomez: There are a lot of people that, that have not received the subsidy for different reasons.

[00:16:14] One reason it may be that they are just not eligible, but lots of these ineligible people, it’s because of the magnitude of the deceleration of the economy and the effect this has on jobs and on incomes. They start to fall into these vulnerable groups that initially were not eligible. So those people are maybe upset that, why am I not eligible?

[00:16:37] The other rural group of people who we need to deal with are all those people that are in line for the next transfer that will happen from now until the end of the of the month, beginnings of June. So we still have people who we’ve not have been able to reach. Some of them, because for instance, they’ve changed their phone number, they’ve changed their address, so we don’t have data on how to contact them and where to contact them.

[00:17:04] The program was, was decided in two phases. One for those who already had a bank account and those were relatively easy to reach. We just had to identify them in our database. Then we worked with the financial sector to identify who of them had a bank account with which institution, and then we could have directly disbursed. The second phrase is with those who have never had or do not have an active account with the financial system and there the challenge was, was a lot larger.

[00:17:35] We worked then with a mobile phone companies to identify from our database those that did not have a bank account, but that did appear as a client of these companies with a registered numbers, cell phone numbers, and with the cell phone number. We started a campaign of sending SMS text messages, inviting them to open it digital products like Nequi, Daviplata, Ahorro a la Mano, Movii — all these digital, digital wallets and through these wallets we could disburse the money.

[00:18:12] But then we started seeing that in these groups of people, if we were trying to reach, a lot of them change in numbers very frequently. Others had their phone stolen, others didn’t have a phone to start with and those were not even in the second group, but in this group, we sent close to 700,000 text messages.

[00:18:34] And more or less, 61% were effective, could effectively go through the process of opening their digital wallets and receiving the money. The rest we are moving them into the second cycle and we’re doing lots of creative things.

[00:18:50] So first thing that we’re doing, we’re trying to get phone numbers up to date. Phone numbers to try to reach them. And there we’re basically using lots of different databases that we have not used before in the context of social programs. So we are using things like the database from the education ministry where we have the parents of the kids enrolled in the Programa de Alimentación Escolar, the food program for kids. So there we are retrieving some of these new phone numbers to try to update them ourselves and be able to reach them with the text messages.

[00:19:28] The second strategy which will be up and running next week, hopefully at the beginning, is we’re designing with Expedia, one of these information systems for the financial sector. A system where people can access with their government-issued ID with their name, with their family name, and then there’s a, there’s a pop-up window that will enable them to update themselves, their cell phone number.

[00:19:56] But this thing, the thing is that, this sounds so simple, but it has to, has to have safety levels comparable to those of the financial sector, so we want to avoid fraud, avoid people claiming that they are someone else to get the subsidy.

[00:20:13] We’ve seen a bunch of fake websites appear where they basically tried to defraud people, asking them for their personal information, telling them that they are beneficiaries of the program, and it’s a lie and fraud, right?

[00:20:29] The third strategy is with microfinancing institutions that are very good working with the bottom of the pyramid in registering them for products. So with them, with two of those institutions, we are working, granting them, giving them information on the addresses of beneficiaries that we got from the postal services in Columbia.

[00:20:50] So from a 472, the public postal service, we provided our database. Did all the merge with the postal services, and we retrieved from those databases, addresses, and those addresses were given to the microfinance institutions. Basically go door to door trying to find these people and to open their digital wallets and transfer the money.

[00:21:16] This is a painstaking, and in the first day that we started, if there were only 30% of addresses that are up to date, no, we managed to increase our hits working with the neighbors basically asking neighbors, “Hey, do you know where your neighbor such and such is living now?” and they would probably be living somewhere else in the same town so we can reach them, but every single additional person that we reach implies additional costs, additional efforts. And the costs are marginally increasing, right, with the, with the banks and the mayors. We’re working on a last mile strategy as well, but that’s kind of the portfolio of all the things we’ve tried.

[00:21:59] Milica Begovic: And if you were to go back and do this differently, what are one or two things that you, you would tweak?

[00:22:08] Daniel Gomez: Huh, I would tweak lots of things (laughter) with foresights, everything. Yeah, I would. It’s, it’s easy to tell what, what went wrong. So I think that one of the things that I would definitely do, do better and, and improve is all the process of communicating. Communicating both within the government with, with our control entities — Procuraduría, Contraloría, Fiscalía, with Registraduría. I would have done a lot more work with them prior to launching the program. We did some of this work with Contraloría, actually, we did tell them that we were in the process of designing this program. We even told them that it would be a process that would not be absence of error. It would be error-prone, and we were minimizing errors.

[00:23:02] That’s something important, but that we would be facing challenges in terms of the limitations of the databases in terms of the operation and that we wanted them to be aware that this would generate a lot of noise, a lot of possible disruption and inquiry.

[00:23:18] And that we were giving them a heads-up so that we could be available to help them understand the program, I would have tried to do this maybe earlier, maybe more. I would have done this with all of our supervisory agencies — communications for the general public. I think we should have started that earlier as well and of course saying this right now, it’s easy because at the time we were designing the program and getting it up and running, right. So we have limited capacity as well, limited bandwidth. But, but if I had known of all the different challenges and roadblocks that we have met on the way, of course, going back in time, I would have planned this a lot better.

[00:24:06] Kal Joffres: How do you see the pandemic as an opportunity to reset some of the things that you’re working on or perhaps the government is working on and, and take a new approach to them?

[00:24:17] Daniel Gomez: We have to have new, strengthened, refurbished policies for long-term sustainable growth. So, from DNP, we are starting to work on that on a COVID CONPES, or a post-COVID CONPES with policy guidelines to strengthen, one, all these transformations in governments that need to be consolidated, but also trying to identify the type of policies, the type of things that we have to start working on right now would be better prepared for a future crisis like this, and it doesn’t have to be a pandemic.

[00:24:55] It can be, I don’t know, a natural disaster. It can be international conflict, all sorts of risks. But I think that coming out of this pandemic, we should definitely be working on policies that make Colombia more resilient, Colombian society and economy more resilient to unexpected shocks, to temporary shocks, and basically to avoid that all these temporary shops reflect in longer term, or reflect as least as possible on long-term outcomes.

[00:25:30] So on the social side, of course, we want to prevent poverty from increasing to levels to that are comparable to what they were 10 years ago. On the production side, we do not want to a whole bunch of firms to go bankrupt in the face of temporary shocks when their fundamentals and their productivity has not changed. So we don’t want to liquidity issues to result in insolvency issues. We don’t want our macro economy to go into disarray in that field.

[00:26:04] I think that we have been pretty heterodox for, for Colombian standards, but still, if you listen to the debates that are going on these days in Congress, a lot of Congressmen from the opposition are of course saying that the economics team in the government should be a lot more bold and, and think out of the box.

[00:26:24] And in terms of fiscal policy, in terms of monetary policy, I still think, and maybe it reflects on my orthodoxy, that we should be very prudent and we do have a pecking order in terms of the policies that we implement and the speed and the order in which we tap into the different instruments.

[00:26:43] The thing is that we know that it will be with us for at least a year, two years. So we don’t want to use all our toolkit in the first month. So in that sense. going back to your question, I think that that we do need to revise our policies in terms of making our economy more resilient.

[00:27:04] A lot of those things mean accelerating things that we already had had a kind of thought of. We can modernize the way the government works, we have to think very carefully, and I think that, that was already coming, but the way we communicate with citizens through social media, through all these things.

[00:27:23] And more in this time of pandemic, citizens are on top of every single thing that the government does and says, so the communication challenge is not minor. And I think that from a policymaker point of view, being aware that being an effective policymaker, it’s not enough to be good technically to have PhDs, to have Master’s degrees, to have technical training.

[00:27:49] You really have to incorporate communications strategy into policy making from the beginning to have a successful policy.

[00:27:56] Milica Begovic: Daniel, this is really interesting. The Center for Global Development calls them no regret policies, policies that implemented now will work no matter what scenario ends up playing out three to six or 12 months into the future, or those that build resilience. I’m curious to know if the government has already started making some of those policy bets today in the middle of responding to, to what is the most unprecedented crisis that most of us can remember in our lifetimes.

[00:28:25] Daniel Gomez: Right now, we do have to think about these longer-term issues.

[00:28:29] And also identifying those things that should be dismantled as quickly as possible. Because of course, I think that some things are, things that are appropriate only for times of emergency and shouldn’t be maintained. And, as we all know, every single policy that we play in is temporary is very, very hard to roll back.

[00:28:50] We have to start identifying now. I think that that’s going to be part of the bigger discussion on the transformation of social policy if we move towards a more kind of a universal basic income, type of scheme. If we want to a minimum guaranteed income. But which would be kind of different if we keep conditionality or not to all the trade-offs involved. Rolling back those policies is hard, rolling back the Ingreso Solidario, it’s been, it’s been communicated.

[00:29:23] And it’s been, it’s been pretty clear that it’s, it’s a temporary measure, so I think that it won’t be that hard to roll back. But the interesting thing is that we have the capabilities and we have the platform already built where we can continue building social policy on top of this.

[00:29:39] All the trade policies that we’ve implemented, all of the regulations that we’ve, we’ve struck down and others that we have implemented anew. All those things I think have to have to be evaluated from the national planning departments. We are already actively working on this agenda.

[00:29:56] We feel that we have to come out of this emergency with some lessons learned, some new policies, some new initiatives, and lots of good thinking ahead.

[00:30:07] Kal Joffres: Tremendously interesting questions, Vice Minister Daniel. Thank you so much for joining us and thank you for taking the time to share some of your on the ground learnings from the work that you’ve been doing.

[00:30:18] Daniel Gomez: No, thank you very much for your interest, for inviting me to talk with you, and I look forward to also sharing experiences with policymakers around the world; other people that you speak with to see how they are dealing with challenges to related with the emergency and how to get out of this emergency strengthened and with a better policies and better life standards for all.

[00:30:43] Kal Joffres: That was Daniel Gomez Gaviria, the Vice Minister of Planning in Colombia. Thanks again for joining us on The Innovation Dividend.

You can subscribe to the podcast on Spotify or Apple.