There is a nice review of conditional cash transfers (CCTs) and the lessons learnt from African and Latin America in UNDP’s IPC website. CCTs are probably one of the most successful welfare, cash transfer programs that have helped tackle poverty effectively while ensuring better enrollment rates and healthcare of children from participating households. Here are some snippets from the publication:
Degalo Hailu and Fabio Veras Soares write:
…CCTs are considered innovative for several reasons: (i) their targeting mechanisms; (ii) beneficiaries receive cash rather than in-kind benefits; and (iii) the transfers are conditional. CCTs are designed to increase the human capital of beneficiaries by making transfers conditional on certain requirements, such as school attendance, visits to health clinics and renewals of immunisation. Additionally, CCTs aim to alleviate poverty in the short-term.
…Impact evaluations of CCTs have shown promising results. First, there is evidence of positive impacts on education and health outcomes. Second, there is some evidence of positive impacts on nutrition, mainly when the CCTs have been accompanied by the distribution of food supplements. Third, no major negative impact on labour supply has been observed (despite criticisms that CCTs foster dependency). Fourth, large-scale programmes have had impressive results in reducing inequality and some impact on poverty measures, especially by narrowing the poverty gap and lessening the severity of poverty.
…The low cost of CCTs, relative to traditional in-kind social assistance interventions, is another attractive feature of the programmes. The costs of Brazil’s Bolsa Família and Mexico’s Oportunidades—the two largest programmes in the region—are much less than 1 per cent of GDP. The way programmes are financed, however, can have crucial implications for their financial and political sustainability.
Tatiana Britto writes about Bosla Familia:
...No single transfer programme, on its own, can lift beneficiaries out of poverty permanently. This can only be done with a synergistic combination of public policies and economic growth, which is far beyond the scope of Bolsa Família.
...Bolsa Família now reaches 11.1 million families across Brazil and provides two different kinds of benefits: a basic transfer, completely unconditional and given to extremely poor families; and a transfer that varies according to the number of children in the family up to the age of 17. This is for poor and extremely poor families and is conditional on human capital investments such as school attendance, immunisation of children and pre-natal check-ups.
...The programme’s rationale is very similar to that of most CCTs in Latin America: to combine the short-term goals of poverty alleviation, through the cash transfers, with the long-term objectives of breaking intergenerational poverty traps, through the conditionalities on health and education.
Illiana Yaschine and Laura Davila write about exit conditions from CCT programs:
...Beneficiaries leave Mexico’s Oportunidades if they are above a certain poverty line. But this strategy does not mean that beneficiaries have built the human capital to break the intergenerational transmission of poverty.
Departure from CCT programmes should not be tied to poverty criteria. Because of the absence of an effective social protection system, the criteria should be based on the initial objective of the programme—building human capital.
…leaving the programme means that families are above the extreme poverty line at a particular moment, but it does not mean that they are no longer poor. This is particularly significant in Mexico’s case, given the limitations of its social and economic policy. The country lacks an effective social protection system, and thus it is not possible to ensure that households leaving Oportunidades will have access to other social programmes or will benefit from overall economic and labour market conditions. Families that leave CCT programmes must have recourse to other policies that enhance their living standards and guarantee their social rights in order to allow them escape from poverty.
Charity Moore write about the sources of funding for CCTs:
...Externally-financed programmes in small countries face challenges that differ from those of self-funded programmes in larger countries. Externally-funded programmes usually focus on short-term goals, while domestically-funded programmes focus on long-term human capital accumulation.
...The CCTs in Honduras and Nicaragua— respectively, the Programa de Asignación Familiar (PRAF) and the Red de Protección Social (RPS)—were two such programmes funded by an external lending institution. They faced obstacles that manifested themselves in different ways, but that stemmed from the similar core challenges involved in balancing the interests of internal and external stakeholders.
...Policymakers must work to balance the short- and long-term interests of internal and external stakeholders in order to create efficient and effective programmes. These can eventually be transformed into broader social protection strategies.
Rafel Perez Ribas and Guilherme Issamu Hirata write about what we do and don’t know about the impact of CCTs:
...Health co-responsibilities (“conditionalities”) might be more difficult to enforce and monitor than educational ones. CCT programmes affect decisions on time and budgetary allocations in favour of children, but it is unclear whether these changes stem from the transfer itself or from other programme components.
Households can be affected by the mere existence of a social programme and the presence of other beneficiaries in their community, whether or not they themselves are participating.
…the evaluation of Bolsa Família in Brazil has shown that beneficiary children are almost four percentage points more likely than non-beneficiaries to fail at school. This evidence raises concerns about the quality of the schooling that beneficiary children are receiving. A current challenge is to determine how CCT programmes could interact with other educational programmes in order to improve school quality and student performance.
...In Mexico, the supply of nutritional supplements for children might be the main reason for this positive impact. In Colombia, positive outcomes are supported by effective enforcement of the health check-up conditionality. In contrast, Bolsa Família’s evaluation shows no evidence of an impact on child nutrition or immunisation. Although it has raised the number of visits to health centres, Paraguay’s pilot programme, Tekoporã, has not managed to increase immunisation either.
... in poor areas the service supply constraint is greater in health than in education…households in poorer communities are more reluctant to change their attitude towards preventive health care than towards school attendance.
…In Mexico, for instance, only 50 per cent of PROGRESA’s diet diversification effect was explained by the monetary transfer (income effect). The remaining effect has been attributed mainly to the talks on health and nutrition.
…Recent studies on PROGRESA have shown that ineligible households are also affected by the programme. Nonbeneficiary households in areas where the programme operated have also increased their consumption because of its effect on the local economy. Moreover, the school enrolment rates of noneligible children have risen in districts that took part in the programme due to the so-called peer effect.
Pablo S. Villatoro writes about the tradeoffs between human capital accumulation and poverty reduction (??? I don’t really get a clear connection!);
…There are trade-offs between poverty reduction in the short- and medium term, and the increase in human capital in the long-term. For instance, if a programme targets those segments of the population with low rates of school attendance, the effects on human capital might be greater than if it had targeted poor families in general. But the impact on poverty would be less because large numbers of the poor would not take part in the programme. Conversely, if a programme focuses solely on the (extremely) poor, the transfers would go to children who are already in school, which may not be efficient in terms of the accumulation of human capital.
...Another approach is to give priority to the population affected by the greatest overlap between poverty and a deficit in human capital. This approach might lead to an increase in transfers to pre-school age children, minimizing the tension between human capital accumulation and poverty relief.
...It would also tackle poverty in the short run because of the demographic composition of the poorest homes. Moreover, it would facilitate labour market participation among poor women, since it lowers the opportunity cost associated with child care.
…if underinvestment in human capital is caused by market failures, income effect (unconditional transfer) is not enough to correct them: the beneficiaries’ behaviour can be more efficiently aligned with the social interest by using conditionalities….it is unlikely that unconditional transfers increase demand, because of the low monetary value of the benefit and the poor quality of the services. But if the aim is to alleviate poverty, using conditionalities makes it harder to achieve that aim, since they limit the beneficiaries’ freedom of choice and imposes extra costs.
...To reduce poverty in the short term, cash transfer programmes would have to impose time limits in order to obviate dependence and graduate beneficiaries who are no longer poor. A programme that seeks to reduce poverty in the medium-term requires complementary policies that foster the adult beneficiaries’ autonomous capacity to generate income, as well as policies that increase local demand for work.
...Programmes that focus sharply on building the human capital of children and adolescents have to provide transfers until the beneficiaries acquire sufficient human capital to increase the probability that they will escape poverty in the future.
Michelle Morais de Sa e Silva writes about Opportunity NYC (which is the first CCT type program in the US):
…The success of an incentivesbased programme such as Opportunity NYC depends partly on how well beneficiaries understand how it operates, so that they can respond to its incentives as expected.
The programme does not intend to alter the governance structure of the school system, nor does it involve innovative pedagogies or new classroom teaching practices.
It simply assumes that, by giving students monetary incentives, it will bring about improvements in test scores.
Sudhanshu Handa and Scott Stewart write about the orphan targeting dilemma in Eastern and Southern Africa:
Targeting households with children has a greater impact on school enrolment than other targeting strategies.
The experience of four countries in Southern Africa demonstrates that an orphan targeting approach reaches more orphans but excludes many of the poorest children, since orphans are not necessarily clustered in the poorest consumption decile. In Malawi, targeting households with children yields an increase in enrolment of five percentage points among children aged 6–17, while targeting households with orphans yields an increase of 4.2 points.
…Hence it is only when the focus is on the ultra-poorest children—those in the bottom decile—that the distinction between the two schemes (child-focused versus orphan-focused) becomes apparent. If policymakers give greater weight to this group, and if good targeting is possible, then the scheme that favours children over orphans will reach more children in the poorest decile relative to an orphan targeted scheme. Such a scheme would also reach about 50 per cent of orphans in the bottom decile.
There is much more in the publication about Social Cash Transfers program in Africa and CCTs in Latin America. Read the full publication here.