Conditional cash transfers

Conditional cash transfers

Conditional Cash Transfer (CCT) programs provide cash payments to poor households that meet certain behavioral requirements, generally related to improve their children´s human capital, such regular school attendance and basic preventive health care. The purpose of these programs is to address the inter-generational transmission of poverty and to foster social inclusion by explicitly targeting the poor, focusing on children, delivering transfers to women, and changing social accountability relationships between beneficiaries, service providers and governments.^[6]

The first generation of conditional cash transfers (e.g. Mexico’s and Brazil’s ) have been marked by good implementation with respect to targeting, general administration and impact evaluation. These programs have been proven to be very effective in reducing poverty in the short term since they have helped to increase household income and consumption in poor families. These programs have also helped to increase school enrollment and attendance and they also have shown improvements in children’s health conditions. Most of these transfer schemes are now benefiting around 110 million people in the region, and are considered relatively cheap, costing around 0.5% of their GDP.

These outcomes represent an increase in the investment of human capital, thus becoming a very important tool for reducing the inter-generational transmission of inequality. However, studies by the UNDP have shown that conditional cash transfers did not represent a significant increase in the quality of education and in learning, nor in significant increases in salaries, once the recipients entered the labor force.

CCT Programs have been proved to be very well-targeted and effective in reaching the poor and the excluded groups, notably the extreme poor living outside the reach of social protection programs tied with formal sector employment The programs have also promoted equality of gender since they provide larger funds to girls given that it is common that they tend to drop out earlier from school, so this has increased their enrollment and attendance to secondary levels of education.In the long run, these investments may also yield to significant changes in women’s empowerment and insertion in economic networks. However, it has been critiqued that these programs do not serve the needs of other marginalized groups, such as some indigenous people and poor families living in certain rural areas, since they live too far away from schools and health centers to effectively comply with the program conditions

More recent pilot adaptations are testing CCTs in a diverse range of settings including a growing list of low income countries, urban settings, and for more specialized purposes.

CCT Programs are efficient tools for reducing poverty and inequality but only in the short term. Hence, it is important that these programs are coordinated with other social programs in ortder to strengthen synergies in poverty alleviation.The progrmas should be linked with programs that support labor market insertion and employment to provide incentives for graduation and opportunities for moving out of poverty. For example, Chile’s Programa Puente targets the 100,000 poorest and most excluded families in urban areas and provides beneficiaries with the support of a social worker for two years. While the monetary value of the transfer is relatively low (US$ 22 PPP 2003 per family per month), the program aims at inserting families into the wider safety net through a tailored plan of conditionalities. Similarly, Bolsa-Família in Brazil seeks to promote local synergies by linking the beneficiaries to preferential housing, micro-credit and local business development, and Oportunidades in Mexico piloted various expansions to the basic program through the Plataforma Oportunidades – albeit with limited success to date,-- as well as credits for secondary school graduates that can be used for micro-enterprise, further education or housing.