Conditional cash transfer (CCT) programs aim to reduce poverty by making welfare programs conditional upon the receivers' actions. The government only transfers the money to persons who meet certain criteria. These criteria may include enrolling children into public schools, getting regular check-ups at the doctor's office, receiving vaccinations, or the like.
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Conditional cash transfers exist in the following countries, among many others:
Many countries in Latin America are now using CCT programs as a major tool of their social policy since they have been proven to be very effective in helping poor families. Although the conditions and amounts of money may vary from country to country, ranging from $5 to $33 per child,[4]in general these programs provide money to poor families under the condition that those transfers are used as an investment on their children’s human capital, such as 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 targeting the poor, focusing on children, delivering transfers to women, and changing social accountability relationships between beneficiaries, service providers and governments.[5] 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. [6]
Conditional cash transfer 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.They have also worked effectively in increasing school enrollment and attendance, especially in middle school. A substantial improvement in health and nutrition of the children that benefit from these programs has been acknowledged.[7] However, studies by the UNDP have shown that conditional cash transfers neither represented a significant increase in the quality of education and in learning nor significant increased 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. On average, 80% of the benefits go to the 40% poorest families.[8] The programs have also promoted equality of gender since they provide larger funds to girls since they often drop out earlier, so it 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.[9]
While most conditional cash transfer programs are located in Latin America, a significant amount of research has been conducted regarding the implementation of these programs in Africa. In addition, programs are looking to the Latin America for examples on how to implement these programs. While there are a few unconditional programs of cash transfers in Africa being tested, two conditional cash transfer programs in Africa are currently being implemented.
The Mchinji Pilot Social Cash Transfer Scheme is part of the larger Malawi Social Protection Policy and Framework, and begain in April 2006. It is mainly financed by UNICEF and the National AIDS Commission. [10]The objectives of the scheme are to reduce poverty of people in the pilot area who are ultra poor and labor constrained, increase school enrolment and attendance, and to generate information regarding the feasibility of a cash transfer program as part of a Social Protection Programme for Malawi. The goal for this program is to reduce the ultra poverty rate from the 22% rate in 2007 to 10% by 2015.[11]
This program targets those households that are ultra poor (Seepoverty for definition) and those who are labor constrained, defined as either a household in which no able-bodied members 19-64 can work due to chronic sickness or disability or a household with one-able bodied member that has to care for more than three dependents. About 22% of Malawi as of 2007 was ultra-poor, living on less than 20 cents a day, and of that group 10% are labor constrained. [12]
The program would give anywhere from 600 kwacha ($4 US) monthly for a one person household to 1800 kwacha ($13 US) monthly for a four or more person family. There is also an extra bonus of 200 kwacha for children enrolled in primary school and 400 kwacha for children enrolled in secondary school.[13] The location for the program is in the Mchinji District, the 14th poorest district out of 28 in Malawi.
It was chosen for its average poverty level of all the districts in Malawi and its proximity to the capital, Lilongwe.[14]
Since 2007 a pilot conditional cash transfer program has been researching its effectiveness in Morocco, organized by the World Bank. The program targets poor regions of Morocco with high dropout rates and should cover 160,000 households by 2010.[15] The pilot program is a comparative test that has four treatment groups. One group is receiving unconditional cash transfers, regardless of child school attendance. The next three are given conditional cash transfers to families of children grades 3-6 based on the child's attendance at school.
The three treatment groups vary in how attendance is monitored, ranging from monitoring attendance based on teacher’s report, all the way to a sophisticated system involving monitoring through biometric fingerprint machines.[16]
In addition, within each classroom, which parent, the mother or father, is also randomized to see if the family benefits more from having the money targeted to one or the other. This study will bring research that assesses the importance of conditionality, monitoring, and targeting within a conditional cash transfer program.[17]
Although the benefits of Conditional Cash Transfer programs across the world have been widely noted, there remains a series of obstacles to their success that have caused some programs to be stunted or terminated completely. [18].
According to a comprehensive study done by Senior Research Analysts Laura Rawlings and Gloria Rubio of the World Bank, the beginning stages of program implementation present the challenge of creating a reliable implementation schedule. [19]. On many occasions, changes in political leadership, natural disasters, or changes in program administration have delayed the implementation schedule and lead to decreased efficiency or program termination [20].
An example of the negative outcomes of one such delay is provided by the UN Development Programme's in-depth study of the short-lived Nicaragua's Social Protection Network. According to the study, the movement of the program administration to the country's Ministry of the Family caused a delay in efficiency and resources that, among other factors, led to the program's termination.[21]. Delays can also be caused by difficulties in developing the Program Management Information System (MIS).[22].
One such delay in Mexico's Oportunidades program caused 27% of its targeted population not to receive any transfers after two years of implementation.[23]
In addition to unscheduled delays, other external factors that can hinder a CCT's success pertain to unexpected financial crisis.[24]According to a comprehensive assessment provided by the World Bank, the structure of Conditional Cash Transfer programs has not, as of yet, been adjusted to retain success in the event of a large financial crisis.[25]
Primarily, Conditional Cash Transfer Programs are not flexible enough to extend benefits to households that fall into the program's targeted population only during economic downturns. Thus, those not normally covered by the program's benefits may be harder hit than those who are but will not be able to be assisted.[26]
Another common obstacle to success in most CCTs is exclusion of needy homes in the targeting process. In an assessment by the World Bank, much exclusion was due to remote communities' inability to access schools or clinics. Many such communities fall into developing countries' most poverty-stricken populations but cannot follow through with conditionalities since the transportation costs to attend schools or hospital visits outweigh the benefits [27]. Furthermore, an evaluation of Mexico's PROGRESA- Oportunidades program addresses the issue that those in poverty with debilitating illnesses can also be excluded from CCTs due to their physical inability to accomplish the conditionalities. [28].
Exclusion has also been noted by both the World Bank study and the PROGRESA-Oportunidades evaluation evident in both community-based targeting and self-targeting approaches. In the case of self-targeting, used by Mexico's PROGRESA-Oportunidades, working women may be excluded from the program because they are unable to miss work to register or accomplish all conditions Latapi, Augustín and Mercedes González de la Rocha.[29]. In the case of community-based targeting, the World Bank study notes that the extremely poor who may live in generally middle-class communities will be excluded.[30]
Targeted populations' distrust of the program due to lack of adequate information has been noted by at least three case studies to be a leading factor in the Conditional Cash Transfer programs’ downfalls. The extensive study by the UN Development Programme on Nicaragua's Social Protection Network (RPS) reveals that the level of distrust of the program was so high that a domestic publicity campaign could have possibly saved the RPS from extinction.[31] This high level of domestic distrust was due, in part, to efforts to politicize the program. [32].
One report addressed in the UN Development Programme's study stated that RPS employees were approached by members of the government, who demanded that half their salaries be donated to the party in power. Although the RPS was successful in avoiding the threats, it was later revealed that the RPS was the only Nicaraguan institution of its kind not making governmental contributions [33].
This same level of distrust is reflected in a study on the feasibility of a Haitian CCT made by the International Food Policy Research Institute. In the focus group they interviewed, almost all subjects expressed a "profound lack of faith" in the Haitian government. Instead, they preferred that the Conditional Cash Transfer Programs be implemented by community committees or NGO’s [34].
However, this distrust in governments' ability to fairly implement Conditional CCTs fairly is not strictly limited to developing countries. In an article in the New York Times addressing the termination of the pilot CCT, Opportunity NYC, the committee leader of one of its lending institutions stated that people were distrustful and confused by the program's intricacies. New York City's deputy mayor for health and human services added that many busy and stressed households were not being able to handle the wealth of conditions they had to complete since they were not efficiently educated about the program.[35].
There is currently much discussion about whether conditionality, or conditions for the cash transfer, is necessary or important to a cash transfer program. Research, such as the pilot conditional cash transfer program in Morocco, is looking at the importance of conditionality. One report looks at data from Mexico's Oportunidades/Progresa program, which looks at families who accidentally did not receive forms that monitor school attendance and therefore received unconditional cash transfers. It then compares them with those households that did receive the forms. It was shown that conditionality had the strongest impact on children's attendance to secondary school, as enrollment rates in secondary school were higher for those that received the forms.[36]
Another report on an experiment in Malawi is researching the importance of conditionality among families with school-age girls. The program was conducted, with data collected between October 2007 and June 2010.[37] It was found that the treatment arm providing conditional cash transfer programs had higher enrollment rates, as well as higher scores in independently administered tests of cognitive ability, mathematics and English reading comprehension. However, the UCT treatment arm had a much lower incidence of pregnancy and marriage among schoolage girls.
A strong argument against the conditionality of social cash transfers is proposed by poponents of a rights-based approach to development. From a human rights perspective, cash transfers are a means to ensure the human rights to social protection and an adequate standard of living for all members of society, including first and foremost the fundamental right to food. States have the duty to ensure those rights with a maximum of available resources. While reducing poverty in general, conditional cash transfers have shown to often exclude those who need it the most, violating the human rights principle of non-discrimination and equality.[38] A system of social protection or development aid that relies only or predominantly on conditional cash transfers ignores the fact that a minimum of social assistance is an accepted and universal human right.
Specific programs: