In Focus 15 edicao grafica - IPC IG · 2 International Poverty Centre FROM THE EDITORS Poverty in...

Poverty Number 15, August 2008

International Poverty Centre

Cash TransfersLessons from Africa and Latin America

2 International Poverty Centre

F R O M T H EE D I T O R S

Poverty in Focus is a regular publication of theInternational Poverty Centre (IPC). Its purpose isto present the results of research on povertyand inequality in the developing world. Supportis provided by the Swedish InternationalDevelopment Cooperation Agency (Sida).

EditorsDegol Hailu and Fábio Veras Soares

International Advisory Board

Desktop PublisherRoberto Astorino

Copy editorAndrew Crawley

Front page: Photomontage by AlexandreAparecido de Souza. It includes parts of photosby Fábio Veras Soares of IPC and Bruno Spadafrom the Ministry for Social Developmentand the Fight Against Hunger, Brazil. IPC thanksthe Ministry for granting permission for usingthe photos.

Editor ’s not e: IPC thanks the SwedishInternational Development CooperationAgency (Sida) for supporting the publicationof the Poverty in Focus series. IPC also thanksall the contributors of the articles, particularlyfor sharing their knowledge and experienceswithout any monetary remuneration.

IPC is a joint project between the United NationsDevelopment Programme and Brazil to promoteSouth-South Cooperation on applied povertyresearch. It specialises in analysing poverty andinequality and offering research-based policyrecommendations on how to reduce them.IPC is directly linked to the Poverty Group of theBureau for Development Policy, UNDP andthe Brazilian Government’s Institute for AppliedEconomic Research (IPEA).

IPC Director (acting)Degol Hailu

International Poverty CentreSBS – Ed. BNDES, 10º andar70076-900 Brasilia DF Brazil

[email protected]

The views expressed in IPC publications are thoseof the authors and do not necessarily reflect theviews of IPC, IPEA or UNDP.

Oscar Altimir, CEPAL, Santiago de ChileGiovanni A. Cornia, Università di FirenzeNora Lustig, Universidad Iberoamericana, MexicoGita Sen, Indian Institute of Management, BangaloreAnna Tibaijuka, UN Habitat, NairobiPeter Townsend, London School of EconomicsPhilippe van Parijs, Université de Louvain

C ash transfer programmes are emerging as indispensable component ofpoverty reduction strategies. The objectives of alleviating short-term poverty

and long-term human capital building are what make cash transfers, particularlyconditional ones, attractive. In Latin America, where cash transfers are widelyimplemented, impact evaluations show significant positive impacts. Improvednutritional intakes, access to health and education as well as reduction in povertyand inequality are observed.

The International Poverty Centre has a comprehensive research agenda on cashtransfer programmes. The work mainly focuses on comparative studies in selectedcountries in Latin America and Sub-Saharan Africa. The Centre, in collaboration withinternational and bilateral agencies, also carries out both quantitative and qualitativeanalyses of the impact of cash transfers on poverty and inequality.

This issue of Poverty in Focus presents a collection of articles covering various aspectsof cash transfer programmes.

Degol Hailu and Fabio Veras Soares provide an overview of cash transfer programmes,particularly focusing on conditional transfers in Latin America and social transfers inselected African countries.

Tatiana Britto discusses Brazil’s Bolsa Familia tracing its origins, outreach and the criticalpolitical support to the programme.

Iliana Yaschine and Laura Dávila highlight the challenges faced by Mexico’s Oportunidadesprogramme in designing exit strategies for long-term beneficiaries.

Charity Moore shows that tensions often arise when cash transfer programmesare funded externally by looking at the cases of Honduras and Nicaragua.

Rafael Perez Ribas, Fabio Veras Soares and Guilherme Issamu Hirata summarize variousevaluations of cash transfer programmes and point to what we know and may not know.

Pablo S.Villatoro examines the different objectives of conditional cash transferprogrammes in Latin America, particularly focusing on the relationship betweenthe goals of the interventions and the mechanisms utilized.

Michelle Morais de Sa e Silva brings into light the cash transfer programme fromthe North – Opportunity New York City and points to its controversial nature.

Sudhanshu Handa and Scott Stewart point out that while directly reaching orphanchildren through transfer programmes may work; the strategy may exclude poor ones.

Esther Schuering notes the need for capacity development as well as politicalsupport to scale-up the social cash transfers in Zambia.

Michael Samson and Sheshangai Kaniki emphasize that social pensions are related toincreases in school attendance and poverty reduction, while costing less thanone per cent of GDP.

Krzysztof Hagemejer shows that African countries can afford and need basicsocial security to tackle poverty and inequality.

Karla Parra Corrêa and Rafael Perez Ribas describe why cash transfer programmesmust be based on needs assessments for successful implementation.

Degol Hailu, Marcelo Medeiros and Paula Nonaka underscore the need for legally protectingcash transfer programmes from political changes and economic fluctuations.

We hope this collection of articles contribute to a better understanding of the design,implementation and impact of cash transfer programmes.

The Editors

Poverty in Focus August 2008 3

IntroductionAccording to the 2005 UN Report on theWorld Social Situation “income transferprogrammes that sustain the poorestfamilies are essential to changing thestructure of opportunities and are keyto reducing the intergenerationaltransmission of poverty and inequality”(p. 2). In the same year, the UN EconomicCommission for Africa recognised thevalue of cash transfers in tacklingextreme poverty in Sub-Saharan Africa.The Commission promised resourcesof up to US$ 2 billion a year, an amountthat was to rise to US$ 6 billiona year by 2015.

Given the growing popularity of cashtransfers, the articles in this issue ofPoverty in Focus draw attention to theconditional cash transfer programmes(CCTs) in Latin America and socialtransfers in Africa.

Conditional Cash Transfer ProgrammesCCTs are considered innovative forseveral reasons: (i) their targetingmechanisms; (ii) beneficiaries receivecash rather than in-kind benefits;and (iii) the transfers are conditional.CCTs are designed to increase thehuman capital of beneficiaries bymaking transfers conditional oncertain requirements, such as schoolattendance, visits to health clinics andrenewals of immunisation. Additionally,CCTs aim to alleviate poverty inthe short-term.

Pablo Villatoro’s article discusses thetensions that might arise between thegoals of poverty alleviation in the shortrun and human capital accumulation inthe long run. Most particularly, he looksclosely at the debate surroundingtargeting mechanisms and graduation(exit) rules. His discussion is basedon the different approaches that CCT

programmes can take: (i) a pure humancapital accumulation approach; (ii) atargeted minimum-income guaranteescheme; and (iii) a focus on increasingthe income-generating potential of adultmembers in beneficiary households inorder to encourage graduation fromCCT programmes.

An example of such tensions is that someCCTs, while having the long-term goal ofsustaining human capital accumulation,also, and paradoxically, have a three- tofive-year limit, after which beneficiariesare required to leave the programme.The timeframes are often the result ofprovisions in the external loans thatfinance the initiatives, or of the termlimits of the governments that introducethem. Because of this short-termfinancing horizon, some programmeshave lessened the emphasis on humancapital accumulation. Exit rules aretherefore established without dueattention to the persistent vulnerabilityof “graduated” families to shocks thatcould pull them back into poverty.

In many cases, there are neither effectiveexit strategies nor ex-post supportprogrammes for families that havegraduated from a programme. Broaderpolicy options are needed to ensurethat beneficiaries do not fall back intopoverty after graduation.

Some of these tensions and challengesare clearly evident in Tatiana Britto’sarticle, which describes the process thatculminated in the launch of Bolsa Famíliain Brazil. In particular, she poses thequestion of whether Bolsa Família is aconventional CCT programme like itspredecessor initiatives Bolsa Escola (schoolgrant) and Bolsa Alimentacão (nutritiongrant), or whether it is a first (targeted)step towards a universal basic incomegrant as already established in Brazilian

by Degol Hailu and Fábio Veras Soares,International Poverty CentreCash Transfers in Africa

and Latin America:An Overview

CCTs, while having thelong-term goal of sustaininghuman capital accumulation,also, and paradoxically, have athree- to five-year limit, afterwhich beneficiaries arerequired to leave theprogramme. The timeframesare often the result ofprovisions in the externalloans that finance theinitiatives, or of the termlimits of the governmentsthat introduce them.

Needs assessmentscan help define feasibleconditionalities, indicatethe need for supply-sideinterventions, and provideinformation on the cost ofthe programmes.

The cost of the social cashtransfer components—thosenot related to health—wouldvary within a range of 3 to 6per cent of GDP for countrieslike Burkina Faso, Cameroon,Ethiopia, Guinea, Kenya,Senegal and Tanzania.

Cash transfer programmeshave been suggested as a wayof helping families that carefor orphans and childrenaffected by HIV/AIDS.


legislation. Tatiana Britto also discussesthe implications of the programme’sstrategy regarding the implementationof complementary programmes andgraduation rules. On the same issue,Iliana Yaschine and Laura Dávila explainthe changes made to the graduationstrategies of Mexico’s Oportunidades.The strategy was reviewed to respondbetter to chronic poverty and vulnerability.

Impact evaluations of CCTs have shownpromising results. First, there is evidenceof positive impacts on education andhealth outcomes. Second, there is someevidence of positive impacts on nutrition,mainly when the CCTs have beenaccompanied by the distribution of foodsupplements. Third, no major negativeimpact on labour supply has beenobserved (despite criticisms that CCTsfoster dependency). Fourth, large-scaleprogrammes have had impressive resultsin reducing inequality and some impacton poverty measures, especially bynarrowing the poverty gap and lesseningthe severity of poverty.

Rafael Ribas, Fabio Soares and GuilhermeHirata summarise what we have learnedfrom those evaluations and review whatwe still need to learn. Most particularlythey consider the added value ofconditionalities and complementaryactivities, and discuss the fact that theseprogrammes are likely to have someexternality effects that can either lessenor heighten their potential impact.They argue that greater understandingof the mechanisms through which CCTprogrammes work is needed, in orderto provide policymakers with betterinformation on design options.

Conditionalities have been controversialin the cash transfer debate. In somecases, they are perceived as tools toguarantee access to universal basic rights(education and health). In other cases, themere existence of conditionalities haveled to the exclusion of some localitiesfrom programmes because of theinadequate supply of services.

As a result, the discourse has changed inmany Latin American countries and theterm “co-responsibility” has been adoptedinstead of conditionality. This changeseeks to emphasise that governments

have the responsibility to guaranteethe adequate supply of education andhealth services, so that beneficiary familiescan comply with the programmes’requirements. In such a context, and asargued in the article by Karla Correa andRafael Ribas, needs assessment exercisesmay be crucial to designing CCTprogrammes. Needs assessments canhelp define feasible conditionalities,indicate the need for supply-sideinterventions, and provide informationon the cost of the programmes.

The conditionality issue is clearly evidentin the only case from the North,Opportunity New York City, which isdiscussed by Michelle Morais de Sa eSilva. She points out the implications ofthe programme for policies designed toimprove pupils’ performance at school.She also questions the effectivenessof linking transfers to individual studentperformance, since that approach maydivert education policy away fromsupply-side issues.

The low cost of CCTs, relative totraditional in-kind social assistanceinterventions, is another attractivefeature of the programmes. The costsof Brazil’s Bolsa Família and Mexico’sOportunidades—the two largestprogrammes in the region—are muchless than 1 per cent of GDP. The wayprogrammes are financed, however,can have crucial implications for theirfinancial and political sustainability.

In her article, Charity Moore analyses thecases of PRAF II in Honduras and the Redde Protección Social (RPS) in Nicaragua, andobserves that external funding throughloans poses new challenges to CCTprogrammes. She shows the difficulties

encountered in integrating the externallyfunded PRAF II with the domesticallyfunded PRAF I in Honduras. She alsorecounts the brief history of RPS:although it exhibited the best resultsin impact evaluations, the programmefailed to gain enough internal supportto ensure its continuity.

Ownership and domestic politicalsupport are critical to the success ofCCTs, and these can only be gainedby institutionalising the programmes.It is crucial to generate a minimumconsensus so that CCTs are not viewedas simply a “single governmentprogramme”, but as part of a broaderpolicy geared towards strengthening acountry’s social protection and povertyreduction strategies.

National ownership and domesticpolitical support, however, are complexissues. On the one hand, as Tatiana Brittonotes, strong support from incumbentgovernments and the programmes’association with senior political figures(usually the president) help facilitateimplementation.

On the other hand, this high visibilitymay compromise the continuity ofthe programmes when governmentschange. Again, this trade-off can onlybe minimised by institutionalisingtransfer schemes. This in turn requirestransparency in the initiatives’implementation and financing. A clearlydefined legal framework, as arguedby Degol Hailu, Marcelo Medeiros andPaula Nonaka, is an essential elementof the institutionalisation process.

The integration of CCTs with broadersocial policies can minimise the risksinvolved in consolidating the dualsystem that characterises socialprotection in Latin American.In most countries, for instance,social policy consists of socialinsurance systems that cover onlyformal sector workers, as well asresidual social assistance initiativesthat protect the extremely poorduring crises (Bastagli, 2007). CCTs cancomplement such systems, especiallyif they are institutionalised andintegrated into a national socialprotection strategy.

The immediatechallenge is to convincefinance ministers andgovernments generallythat social cashtransfers are not simplyhand-outs but necessarysocial investments.


Social Cash TransfersSocial cash transfers (SCTs) have beenwidely discussed in a number ofAfrican countries. Since the LivingstoneConference on Social Protection in March2006, governments and multilateralinstitutions such as the African Unionhave been increasingly engaged in thediscussion of SCTs in the region. SCTs,however, are not a novelty in Africa.Mauritius has a universal basic pensionscheme that was established in the 1950s.Namibia also has a longstanding socialpension programme.

South Africa is well known for its rights-based approach to cash transfers, withlarge programmes such as the old agepension, the disability grant and thechild support grant. Even less-developedMozambique has implemented thePrograma de Subsidio de Alimentos (PSA),a non-contributory social transfer topeople unable to work. The PSA, whichhas more than 100,000 beneficiaries, canbe considered a large-scale programmein comparison to the present pilotschemes in other African countries.SCT initiatives, however, are more theexception than the rule in the continent.

The challenges to establishing SCTsin Sub-Saharan African countries arenumerous. First, there is a deeplyentrenched belief that cash transfersare hand-outs that would reducelabour participation. Second, there is awidespread perception that transferswould divert resources from investmentin infrastructure and much-neededspending on social services such as public(free) provision of primary and secondaryeducation and primary health care.

The immediate challenge is to convincefinance ministers and governmentsgenerally that SCTs are not simplyhand-outs but necessary socialinvestments. They also should beconceived as complementary to theexpansion of social services, witha view to reaching poor families.

The article by Michael Samson andSheshangai Kaniki sums up the availableevidence on the developmental impactof social pensions. They present evidenceshowing that cash transfers have apositive impact on education and health

outcomes even in the absence ofconditionalities. SCTs are also conduciveto an increase in the investment made byhouseholds, and help households tomanage social risk.

Esther Schuering’s article describes thepresent pilot cash transfer programmesin Zambia and analyses the challengesof institutionalising SCTs within thecountry’s mainstream social policies.She highlights the difficulties involvedin securing support from the Ministryof Finance to develop a nationalprogramme based on the lessonslearned from the pilot schemes.Extending the programmes tolarge-scale national coverage isconstrained by cost concerns.

Krzysztof Hagemejer’s article makes thecase for basic social security. He showsthat a basic social security package isaffordable and can encompass:(i) universal access to essential healthcare services; (ii) a universal basic old-ageand disability pension; (iii) basic childbenefits for the first two children; and(iv) basic social assistance providing a100-day employment guarantee to thepoorest 10 per cent of household headsof working age.

The cost of the SCT components—thosenot related to health—would vary withina range of 3 to 6 per cent of GDP forcountries like Burkina Faso, Cameroon,Ethiopia, Guinea, Kenya, Senegal andTanzania. He also proposes ways ofachieving those goals gradually.

The HIV/AIDS pandemic has erodedtraditional family support networks andmany orphans have to be cared for bytheir grandparents and/or uncles andaunts. This situation is particularlyworrying in East and Southern African(ESA) countries. Cash transferprogrammes have been suggestedas a way of helping families that care fororphans and children affected by HIV/AIDS.

The article by Sudhanshu Handa andScott Stewart discusses alternativetargeting approaches to extend thecoverage of SCTs. The alternatives arebased on current versions of SCTschemes in ESA countries. These include:(i) the labour-constrained households

model that gives support to householdswithout an adult member who is ableto work (Kalomo pilot in Zambia andMalawi); (ii) households with elderlyor disabled members (Mozambique);(iii) households with orphans (Botswana);and (iv) households with children.Their evidence for Uganda and Malawisuggests that targeting childrenis the best way of reaching the pooresthouseholds and guaranteeing significantimpacts on school enrolment.

One of the challenges for SCTs isthat limited resources make choosingamong different targeting optionsproblematic. For instance, even ifuniversal social pension schemes areto be implemented, the eligibility agewould be the targeting criterion.This in turn is determined by thebudget available rather than by theimpact on poverty and/or on otherdevelopmental outcomes.

Careful and robust evaluationsof relatively well-established STCschemes—such as the PSA inMozambique and the current pilotschemes in Zambia, Malawi andKenya—may offer important insightsinto how to expand SCT programmeswithin the current fiscal constraintsfaced by most Sub-Saharan Africancountries. Such evaluations will bepowerful tools of advocacy to winsupport from society at large.

Bastagli, F. (2007). “From Social Safety Netto Social Policy? The Role of ConditionalCash Transfers in Welfare StateDevelopment in Latin America”. London,STICERD, London School of Economicsand Political Science. Draft paper.

UN (2005) “The Inequality PredicamentReport on the World Social Situation”,United Nations.

The high visibility ofCCTs may compromisethe continuity of theprogrammes whengovernments change.This trade-off canonly be minimisedby institutionalisingthe programmes.


Brazil’s Bolsa Família, the world’slargest conditional cash transferprogramme (CCT), has yielded verypositive results in terms of targetingand its effects on poverty and inequality(Soares et al., 2007). The programme isthe flagship initiative of President Lula’sumbrella social strategy, “Zero Hunger”(Fome Zero), established in line with hiscampaign slogan that every Brazilianshould be entitled to at least threemeals a day.

Bolsa Família now reaches 11.1 millionfamilies across Brazil and provides twodifferent kinds of benefits: a basic transfer,completely unconditional and given toextremely poor families; and a transferthat varies according to the number ofchildren in the family up to the age of 17.This is for poor and extremely poorfamilies and is conditional on humancapital investments such as schoolattendance, immunisation of children andpre-natal check-ups.

The programme’s rationale is very similarto that of most CCTs in Latin America: tocombine the short-term goals of povertyalleviation, through the cash transfers,with the long-term objectives ofbreaking intergenerational povertytraps, through the conditionalities onhealth and education.

The origins of Bolsa Família can be tracedto long before Lula took office. After 21years of military dictatorship, Brazilunderwent a peaceful transition todemocracy in the mid 1980s. A newconstitution in 1988 emphasisedrecognition of social rights and the needto address a historical debt to the poor.

This constitutional emphasis set thestage for a controversial debatein the Brazilian Senate in the early

Currently, Bolsa Famíliareaches 11.1 million familiesacross the country.

Although Bolsa Familiaenjoys multi-partisansupport and has managedto share credit withmunicipal governmentsthrough decentralisedimplementation, ithas become verystrongly associatedwith President Lula.

No single transferprogramme, on its own,can lift beneficiaries outof poverty permanently.This can only be done witha synergistic combination ofpublic policies and economicgrowth, which is far beyondthe scope of Bolsa Família.

If the programme is to beunderstood as a minimumincome grant, perhaps itwould make more sense totalk about its expansionstrategy rather than itsgraduation rules.

Brazil’s Bolsa Família:Understanding ItsOrigins and Challenges

1990s on the establishment ofa universal minimum income.

At the time, scholars had given the pressthe idea that income alone was far fromenough to tackle the persistent problemof poverty. What was needed was anapproach that addressed poverty’sstructural causes, which were seenas being directly related to thepopulation’s low levels of schooling.These two ideas were combined in aproposal for a cash transfer that wouldencourage families to ensure that theirchildren received schooling, and thebasic design of an education-relatedCCT emerged (Lindert et al., 2007).

From 1995 onwards, several Brazilianmunicipalities initiated such CCTs. Thesewere given some prominence in thepress and generally had positive results.In 2001, President Fernando HenriqueCardoso introduced an education CCT,Bolsa Escola, at the national level. Thisbuilt on a smaller programme thattransferred resources for municipalitiesto implement their own CCTs. Anotherlarge CCT programme, related to healthand nutrition (Bolsa Alimentação), wascreated shortly afterwards (Britto, 2008).

When Lula took office at the startof 2003, in addition to these two largeand targeted CCTs, Brazil had anunconditional transfer to compensatepoor families for the end of fuelsubsidies (Vale Gás) and a smaller CCTdesigned to eradicate child labour (PETI).

The president created his own CCTinitiative (Cartão Alimentação). Thiswas closely linked to the idea of ZeroHunger, in that it targeted the mostimpoverished areas of the countryand nutrition was its main goal.Symbolically, this latter programme

by Tatiana Britto,Federal Senate, Brazil


was placed in the new ExtraordinaryMinistry for Food Security. At theprogramme’s start, there was an attemptto make the transfers conditional on thepurchase of food, but this idea wasdropped after fierce criticism fromdifferent stakeholders and scholars.

This array of similar programmes,directed at the same target population,caused inefficiency and led to aduplication of efforts. Hence theproposal to establish a reformprogramme that would consolidate itspredecessors. In October 2003, therefore,Bolsa Família was created and shortlyafterwards a new government agency,the Ministry for Social Developmentand the Fight against Hunger, wasestablished to lead its implementation.Social assistance and food securitypolicies were also put under theMinistry’s administration.

In January 2004, talk of a minimumincome grant regained momentum as abill that had been under discussion inCongress for 10 years was finally passedand approved by Lula. The law affirmsthe right to a guaranteed basic incomein order to cover the fundamental rightsof citizens such as food, education andhealth. This basic income is to beintroduced gradually, giving priorityto the neediest groups and in line withbudgetary considerations.

The understanding of the bill’ssupporters was that Bolsa Familia,although targeted at the poor, was a firststep towards this universal basic income.Hence the secretariat in charge of BolsaFamília in the Ministry for SocialDevelopment was called the NationalSecretariat for Citizenship Income.

Today there seems to be some dispute asto whether Bolsa Família is a conventionalCCT or a first step towards a universalbasic income. Although this dispute mighthelp harness support for the programmefrom different political viewpoints, it alsoentails some controversies.

For instance, much has been writtenin the Brazilian press about potentialdisincentives to work and dependenceon the transfers. Interestingly,evaluation results indicate that the

programme has had no negative impacton the labour market. On the contrary,in general its beneficiaries have a higherrate of participation in the labour marketthan non-beneficiaries. This mightbe related to the value of the cashtransfers, which perhaps is insufficientfor beneficiaries to stop working unlessthey have highly unstable incomes orprecarious jobs. It could also be becausethe provision of steady incomes for thepoor might function like a microcreditscheme, allowing them to make morerational investments and expenditures(Medeiros et al., 2008)

As regards dependence on the transfers,this matter is part of the debate onexit from the programme, a debatethat is present in most CCTs. WhenBolsa Família began there was a strongemphasis on its link with what werecalled “emancipatory strategies”. Althoughthis issue is still present, it appears tohave lost strength in the programme’sofficial discourse. This is probablybecause of a perception that transfersmight be needed for a long periodbefore beneficiaries can be liftedout of poverty sustainably.

Currently, Bolsa Família does not haveclear exit rules. The first question to beasked in a discussion of graduation orexit rules is: graduation from what?From the programme or from poverty?Clearly, no single transfer programme,on its own, can lift beneficiaries out ofpoverty permanently. This can only bedone with a synergistic combinationof public policies and economic growth,which is far beyond the scope of BolsaFamília. And if the programme is to beunderstood as a minimum income grant,perhaps it would make more sense totalk about its expansion strategy ratherthan its graduation rules.

The programme faces three significantchallenges in the future. The first is thequestion of political sustainability.Although Bolsa Familia enjoys multi-partisan support and has managedto share credit with municipalgovernments through decentralisedimplementation, it has become verystrongly associated with President Lula.This might jeopardise its continuationunder a different administration.

Another challenge is to minimiseexclusion errors, either by makinggreater efforts to reach the poorest(this might have substantial politicaleconomy costs, since it would meanexcluding a significant number of near-poor beneficiaries) or by expanding itscoverage (which would requireadditional funds).*

Finally, there is a debate about thesustainability and replicability of theprogramme’s impressive impacts onpoverty and inequality. It can be arguedthat these results stem from its sizeableexpansion of coverage in a relativelyshort period. Are these one-time impactsthat cannot be replicated? Futureresearch will answer this question.

Britto, T. (2008). “The Emergence andPopularity of Conditional Cash Transfers inLatin America”, in: Armando Barrientos andDavid Hulme (eds), Social Protection for thePoor and Poorest: Concepts, Policies andPolitics. London, Palgrave Macmillan.

Lindert, K.; A. Linder; J. Hobbs andB. De la Briere (2007). “The Nuts andBolts of Brazil’s Bolsa Família Program:Implementing Conditional Cash Transfers ina Decentralized Context”, Social ProtectionDiscussion Paper No 709. Washington,World Bank.

Medeiros, M.; T. Britto and F. Soares (2008).“Targeted Cash Transfer Programmes inBrazil: BPC and the Bolsa Família”,IPC Working Paper No 48. Brasilia,International Poverty Centre.

Soares, F.; R. Ribas and R. Osorio (2007).“Evaluating the Impact of Brazil’s BolsaFamília: Cash Transfer Programmesin Comparative Perspective”,IPC Evaluation Note No 1. Brasilia,International Poverty Centre.

* Contrary to anecdotal evidence often presentedin the Brazilian press, the main targeting issuefor Bolsa Família seems to be under-coverage.Since the programme works with municipal quotasof beneficiaries, there is a significant waiting list inalmost all municipalities. Leakage does occur, butmostly to those who are very close to the programme’seligibility threshold (Medeiros et al., 2008).

Interestingly,evaluation resultsindicate that theprogramme has hadno negative impact onthe labour market.


The success of conditional cashtransfer programmes (CCTs) inimproving various indicators ofwellbeing is one of the reasons for theirreplication worldwide. However manyissues concerning the design of theseprogrammes are still under debate. Onesuch issue is the duration of benefits.Should the benefits be permanent ortemporary? If temporary, what criteriashould dictate beneficiaries’ exit fromthe programme? What type of socialprotection system should be in place toensure that an exit scheme does not runcounter to the programme’s objectives?

Mexico’s Oportunidades (formerlyPROGRESA) is one of the best known CCTprogrammes. Its experience with design,implementation and evaluation hasprovided a very important learningtool for international institutions andnumerous countries. The programmewas created in 1997 to help break theintergenerational transmission of poverty.The provision of conditional benefitsseeks to build the human capital ofextremely poor families.

Those benefits include: a cash transferfor food consumption; nutritionalsupplements for small children, as well asfor pregnant and lactating women;access to primary health services;scholarships for education from third totwelfth grade; additional cash incentivesfor transition from secondary schoolto high school, and for finishing highschool; and cash transfers for elderlybeneficiaries. The benefits are conditionalon the beneficiaries’ attendance at healtheducation sessions, health check-ups andschool. Oportunidades started in highlymarginal rural communities and wasthen expanded to rural and urban areasthroughout the country. It now providesbenefits to 5 million extremely poorhouseholds in all of Mexico’s municipalities.

The question of duration was consideredin the programme’s original design. Theplan was that beneficiary families couldstay in the programme if they remainedeligible. The duration of the benefitswas based on a reassessment of theirsocioeconomic status. The reassessmentwas to be carried out three yearsafter the beneficiaries’ admission tothe programme.

It was later established that thosefamilies above a reassessment line—equivalent to the eligibility line used foradmission, plus the amount of themonthly cash transfer for foodconsumption—would be transferred to adifferentiated scheme. This was to happenthree years after the reassessment surveyin rural areas, and one year after thesurvey in urban areas. The families wouldstay in the differentiated scheme for threemore years and then they would leave theprogramme. This differentiated schemeconsists of the former benefits minus thecash transfer for food consumption andthe primary school scholarships, which areassumed to be affordable by beneficiaryfamilies above the eligibility threshold.

The exit strategy is intended to avertdependence on the programme andto ensure that only eligible familiesremain on the roster. Additionally, thedeparture of some beneficiary familieswould make room for the inclusion ofother eligible families that were not inthe programme because of budgetaryconstraints. The implementation of thisstrategy, however, raised significantconcerns. The main concern waswhether the income of those householdsreallocated to the differentiated schemewas at least enough to guarantee aminimum level of wellbeing.

The challenge was to determine ifbeneficiaries would be able to sustain

Why, When and HowShould BeneficiariesLeave a CCT Programme?

Beneficiaries leave Mexico’sOportunidades if they areabove a certain poverty line.But this strategy does notmean that beneficiaries havebuilt the human capital tobreak the intergenerationaltransmission of poverty.

Departure from CCTprogrammes should not betied to poverty criteria.

Because of the absence ofan effective social protectionsystem, the criteria should bebased on the initial objectiveof the programme—buildinghuman capital.

by Iliana Yaschine, El Colegio de Méxicoand Laura Dávila, Oportunidades


their improved wellbeing over time—especially whether they could upholdtheir children’s health and nutrition status,as well as guarantee continued schoolattendance, without monetary incentives.One of the main discussions was whetherfamilies should leave the programmeaccording to poverty or human capitalindicators. This highlighted the fact thatOportunidades is designed to build humancapital in the medium and long-term,not to fight poverty in the short-term,even if both objectives have becomeintertwined in practice.

After the first families were transferredto the differentiated scheme in 2003,independent studies were commissionedto provide data that would informpossible adjustments to the strategy(Escobar and González de la Rocha, 2004;Escobar, González de la Rocha and Cortés,2005; Todd, 2006; Solís, Banegas andMora, 2007). These studies relied onquantitative analysis based on paneldata, and qualitative research thatfocused on the beneficiaries who werefirst admitted to the programme (thoseliving in rural areas and highly marginalcommunities). The research findingsinclude the following:

Reaching the improved levelof wellbeing that could movehouseholds above the eligibility lineis a long-term process. After threeyears, the deprivation of 98 per centof the households in the programmewas not sufficiently reduced to takethem above the eligibility threshold.After six years, only about 20 per centof households crossed this line.Many households that were transferredto the new scheme could cope withthe reduction in benefits withoutendangering their investment inhuman capital. However, some wereextremely vulnerable and were forcedto reduce their basic foodconsumption and/or withdrawchildren from school. They includedhouseholds with only elderly and sickmembers; young households with ahigh dependency rate; householdswith chronically ill members; and thehouseholds of recent migrants fromrural to urban areas.Of the households that crossed theeligibility line, 42 per cent eventually

returned below the line. Only 4 percent of the households analysed inthe panel were able to cross theeligibility threshold and remain there.

The results of these studies reveal theneed to adjust the exit scheme in orderto take account of the longer-termnature of the process of povertyreduction. They suggest the prevalence ofchronic poverty among the beneficiaries,as well as a high degree of vulnerability.On the basis of these findings, thefollowing changes were made to thescheme between 2006 and 2008:

The period before the firstreassessment of households wasincreased from three to six years.If households cross the reassessmentline after this period, they will betransferred immediately to thedifferentiated scheme for six moreyears. After 12 years they leavethe programme.The timeline was equalized forrural and urban households.Households composed whollyof elderly people were exemptedfrom the exit strategy.Households that leave theprogramme may ask to be readmittedif their living standards deteriorate.Households that remain eligible afterthe first reassessment of theirsocioeconomic status undergo asecond reassessment eight to nineyears after their admittance. If theyare above the reassessment line, theyare transferred immediately to thedifferentiated scheme and must leavethe programme three years later.

To date, almost 200,000 households (4 percent of those reassessed), mainly fromhighly marginal rural communities, havebeen transferred to the differentiatedscheme. Some of these have already leftthe programme and the rest will do soaccording to the rules outlined above.Households from less marginalcommunities and urban areas haverecently been reassessed. The resultsavailable so far suggest that a higherpercentage will be transferred to thedifferentiated scheme in the comingyears, but this will not exceed 12 per centof the beneficiary households. The smallpercentage of households that form part

of the exit strategy is consistent with thefact that Oportunidades is a well targetedprogramme with a long-term objective.

Oportunidades is leading the way ininnovation and learning for CCTs. As aresult of the recent changes, the strategynow responds better to chronic povertyand vulnerability. But there are stillchallenges that have to be consideredin the future. First, while recent changesgive households more protection againstthreats to their children’s human capitaldevelopment, exit from the programmeis still determined by poverty criteriarather than by human capital indicators.This issue might be addressed in thenear future, since Oportunidades willrevise its targeting criteria in line withrecent regulations.

Second, leaving the programme meansthat families are above the extremepoverty line at a particular moment, butit does not mean that they are no longerpoor. This is particularly significant inMexico’s case, given the limitations of itssocial and economic policy. The countrylacks an effective social protectionsystem, and thus it is not possibleto ensure that households leavingOportunidades will have access to othersocial programmes or will benefit fromoverall economic and labour marketconditions. Families that leave CCTprogrammes must have recourse toother policies that enhance their livingstandards and guarantee their socialrights in order to allow them escapefrom poverty.

Escobar, A. and M. González de la Rocha(2004). “Evaluación cualitativa de medianoplazo del Programa Oportunidades en laszonas rurales” in: B. Hernández and M.Hernández (eds), Evaluación externa deimpacto del Programa Oportunidades 2004.Mexico, INSP, 247–316.

Escobar, A.; M. González de la Rocha andF. Cortés (2005). “Documento analíticodel esquema diferenciado de apoyos delPrograma Oportunidades, 2005”. Mexico,CIESAS and El Colegio de México, mimeo.

Solís, P.; I. Banegas and M. Mora (2007).“Trayectorias de elegibilidad de los hogaresen localidades incorporadas en las primerasfases del Programa Oportunidades (1997-1998)”. Mexico, El Colegio de México, mimeo.

Todd, J. (2006). “¿Graduarse o no graduarsede Oportunidades? Un análisis de lastransiciones desde y hacia la elegibilidady de la dinámica de los activos”.Washington DC, BID, mimeo.


By definition, conditional cashtransfer programmes (CCTs) are directedtowards poor beneficiaries who mustmeet specified requirements in order toreceive the transfers. Beneficiaries aretypically female household heads,since policymakers assume that thesehousehold members are more inclined toinvest benefits in ways that most favourchildren. The programmes focus on somecombination of poverty reduction andlong-term human capital accumulation,and these goals are met by requiringbeneficiaries to invest in educationand health care.

CCTs, while having similar characteristics,may vary greatly in their compositionand their environments. In particular,externally-financed programmes in smallcountries face challenges that differ fromthose of self-funded programmes inlarger countries.

The CCTs in Honduras and Nicaragua—respectively, the Programa de AsignaciónFamiliar (PRAF) and the Red de ProtecciónSocial (RPS)—were two such programmesfunded by an external lendinginstitution. They faced obstacles thatmanifested themselves in differentways, but that stemmed from thesimilar core challenges involved inbalancing the interests of internaland external stakeholders.

PRAF was created by the Hondurangovernment in 1990 to compensate poorHondurans who had been adverselyaffected by structural adjustment. Thebest known version of the programme,PRAF II, began in 1998 and was financedby the Inter-American Development Bank(IDB). PRAF II was the first version of theprogramme to have characteristicscommon to CCTs. Earlier versions of PRAFwere CCTs in name rather than inpractice. PRAF II focused on human

capital accumulation among poor ruralHondurans and supplemented theincomes of beneficiary households.Beneficiaries were obliged to send theirchildren to school, and to ensure thatthey and their children had regularmedical check-ups.

PRAF also used supply-sidecomplements to encourage thedevelopment of education and healthcare services in targeted areas. Animpact evaluation conducted by theInternational Food Policy ResearchInstitute (IFPRI) concluded that theprogramme increased school enrolmentand attendance, as well as attendanceat regular medical check-ups, but thatpoverty levels and nutritional intakeshad not improved greatly (IFPRI, 2003).

These results were partially attributed tothe low level of the cash transfers, whichamounted to less than 4 per cent of apoor rural family’s annual expenditure(IDB, 2004).

PRAF II ended in 2006 and another IDBloan operation, here referred to as PRAFIII, began in 2007. A major goal of PRAF IIIhas been to standardize and integratethe new, externally-financed version ofPRAF. Like PRAF II, the loan-funded PRAFIII runs alongside the nationally-fundedand directed PRAF.

Over time, two parallel programmeshave developed. The loan-financedprogramme has complied with IDBstandards. The domestic version hasoperated independently on the basis ofits own standards and goals. It providedbenefits to poor households but itsconditionalities were not enforced, andthus practitioners and beneficiaries haveviewed it as an unconditional cashtransfer. Currently, officials areattempting to integrate the two

Why Sources ofFunding for CCTs Matter in Honduras and Nicaragua

Externally-financedprogrammes in smallcountries face challengesthat differ from those ofself-funded programmes inlarger countries.

Externally-fundedprogrammes usually focuson short-term goals,while domestically-fundedprogrammes focus onlong-term humancapital accumulation.

According to their objectives,PRAF and RPS were to focuson long-run human capitalaccumulation, but theshortness of the loanterms and deadlinesdirected most attentionto short-run objectives.

Policymakers mustwork to balancethe short- and long-terminterests of internal andexternal stakeholders inorder to create efficientand effective programmes.

by Charity Moore,Ohio State University


programmes, and to make PRAF a centralcomponent of the president’s network ofsocial protection policies.

Nicaragua’s RPS arose from a jointundertaking of Nicaraguan officials andthe IDB. Similar in its components to theHonduran programme, RPS focused onpoverty alleviation and human capitalaccumulation among the extremely poor.It required beneficiaries to ensure thatchildren attended school and receivedhealth checks, and it encouraged supply-side provision by compensating providersof education and health services.

RPS also included a strong educationalcomponent for beneficiaries in order toencourage behavioural changes. IFPRI’sevaluation of RPS found that it improvededucation-related variables andsignificantly improved nutritionaloutcomes relative to a control group.

The impacts of RPS were greatest amongthe poorest households. The transfersrepresented about 18 per cent of atypical beneficiary household’sexpenditures (Maluccio and Flores, 2004).

RPS officials made adjustments to theprogramme and a second IDB loan phaselasted from 2002 to 2004. The mostsignificant change in the second phasewas that the programme’s headquartersmoved from the Fondo de Inversión Socialde Emergencia (FISE) to the Family Ministry(MiFamilia). The programme lost much ofits autonomy with the move to MiFamilia.This change also forced RPS officials toassume responsibilities outside of theprogramme and to share resources withother programmes. These developmentswere the beginning of the end of RPS.Although it was recognized internationallyfor its success, domestic support for itwas weak and the loan programme wasnot renewed after RPS II was completed.

A lending relationship was necessaryand helpful for both the Honduran andNicaraguan programmes. The IDBprovided invaluable guidance toprogramme officials, encouragingefficiency and effectiveness. In particular,the loan-financed programmes were ledby technically capable and competentindividuals who held the initiativesto high standards. This relationship,

however, also posed significantchallenges to PRAF and RPS, which hadto cater to both external and internalstakeholders. The challenge was toadhere to the lender’s stipulationswhile aligning the programmes withthe countries’ long-term socialprotection strategies.

PRAF and RPS officials were concernedthat their CCTs might be undulyinfluenced by domestic pressures, andthey tried to leverage their institutionalstructures in order to limit suchinfluences. PRAF II began after adomestic programme had already beenestablished, and it created a completelynew space within which to operate.It functioned separately from thedomestic PRAF, ensuring that it metthe IDB’s standards in hiring practicesand programme features.

This arrangement divided theloan-financed CCT from the domesticinitiative, essentially creating twoprogrammes that shared little morethan a name. Integrating theprogrammes required significanttime and financial resources.

RPS, created as a pilot programme, wasable to maintain relative independencein its first loan phase because it waslocated in a government agency knownfor its efficiency. That agency’s focus wasunrelated to RPS, and thus it allowedprogramme officials the autonomy theyneeded. In the second loan phase, whenthe Nicaraguan government wanted theprogramme to fit into its proper positionwithin the Family Ministry, theprogramme lost the independence thathad allowed it to function effectively.

According to their objectives, PRAF andRPS were to focus on long-run humancapital accumulation, but the shortnessof the loan terms and deadlines directedmost attention to shortrun objectives.When the RPS and PRAF loans ran theircourse, it was not clear that that theprogrammes had made long-term impacts.This was especially true for PRAF, whosecash transfers were small and infrequent.

The focus on long-term objectiveswas even harder to maintain whencomplications arose in programme

implementation, as happened in PRAF’scase. This matter may be mitigated if theCCT is designed to foster long-termgoals even if it faces difficulties or isdiscontinued. For instance, long-termbehavioural changes amongbeneficiaries were more likely in aprogramme like RPS, which emphasizedthe adult education component.

Another issue that merits attention is theneed to promote the programme todomestic officials throughout the lifeof the loan. PRAF officials have had tojustify PRAF’s existence continuallyto government officers. Recent domesticsupport has been a boon to theprogramme. One of RPS’s weaknessesis that officials were so busy trying toimplement the programme that theyspent insufficient time communicatingits success to domestic stakeholders.

Although RPS was internationallyrenowned, Nicaraguan officials wereunaware of how the programmeoperated or its accomplishments. Itssuccess was not enough to ensure itssustainability; a strong public relationscampaign was also vital.

The challenges faced by Honduran andNicaraguan CCT officials were notanomalies. They reveal some of thepitfalls that countries may encounterwhen they develop CCTs with thesupport of external financing. Thislending relationship, though helpful inmany ways, poses additional challenges.

Policymakers must work to balancethe short- and long-term interests ofinternal and external stakeholders inorder to create efficient and effectiveprogrammes. These can eventually betransformed into broader socialprotection strategies.

IDB (2004). Programa Integral de ProtecciónSocial, Propuesta de Préstamo (HO-0222).Washington, DC, IDB.

IFPRI (2003). Sexto Informe. ProyectoPRAF/BID Fase II: Impacto Intermedio.Washington, DC, IFPRI.

Maluccio, J. and R. Flores (2004). “ImpactEvaluation of a Conditional Cash TransferProgram: The Nicaragua Red de ProtecciónSocial”, Food Consumption and NutritionDivision Discussion Paper No 184.Washington, DC, IFPRI.


Health co-responsibilities(“conditionalities”) might bemore difficult to enforce andmonitor than educational ones.

CCT programmes affectdecisions on time andbudgetary allocations infavour of children, but it isunclear whether thesechanges stem from thetransfer itself or from otherprogramme components.

Households can be affected bythe mere existence of a socialprogramme and the presenceof other beneficiaries in theircommunity, whetheror not they themselvesare participating.

The Impact of CCTsWhat We Know andWhat We Are Not Sure About

Conditional cash transfer (CCT)programmes are known for their doubleobjective of short run poverty alleviationand breaking intergenerational povertyin the long-term. The short run effects onstandard measures of poverty andinequality are relatively easy to assess,but it is quite difficult to determinewhether long-term objectives are beingmet. Short- to medium-term evaluationscan only provide indications of whetherinputs that could lead to a break in theintergenerational cycle of poverty, suchas higher school attendance, betternutrition and higher health serviceutilization, are being achieved

At the end of the 1990s, the rigorousimpact evaluation of the Mexican CCTprogramme PROGRESA/Oportunidades,conducted by the International FoodPolicy Research Institute (IFPRI), set a newbenchmark in how developmental policiesshould be assessed. Its experimentalframework, which included the use of asound control group, allowed researchersto develop consistent analyses of theprogramme’s impacts. This approach wasreplicated by IFPRI in evaluations of thePrograma de Asignación Familiar (PRAF II) inHonduras and the Red de Protección Social(RPS) in Nicaragua, and by the World Bank

in the evaluation of Bono de DesarrolloHumano (BDH) in Ecuador.

Other countries have also carriedout impact analyses of their CCTprogrammes. For instance, Familias enAcción in Colombia evaluated by theInstitute of Fiscal Studies (IFS), BolsaFamília in Brazil by the Center ofDevelopment and Regional Planning(Cedeplar), Program for the AdvancementThrough Health and Education (PATH) inJamaica by Mathematica Policy ResearchInc and Tekoporã in Paraguay by theInternational Poverty Centre (IPC).But the design of these evaluationswas not experimental. They used “quasi-experimental” techniques to estimatethe impacts of those programmes.

Impact evaluations usually assess boththe core objectives of CCT programmesand possible unintended effects onhousehold behaviour. We already knowthat these programmes have had positiveeffects on both primary and secondaryschool enrolment (increases of betweenfour and eighteen percentage points), aswell as on raising attendance rates andreducing dropout rates.

Evaluation of PROGRESA, however, has alsoyielded dismaying results in the area ofeducational achievement; namelybeneficiary students have not got bettertest scores than non-beneficiaries. Similarly,the evaluation of Bolsa Família in Brazil hasshown that beneficiary children are almostfour percentage points more likely thannon-beneficiaries to fail at school. Thisevidence raises concerns about the qualityof the schooling that beneficiary childrenare receiving. A current challenge is todetermine how CCT programmes couldinteract with other educationalprogrammes in order to improve schoolquality and student performance.

With regard to child health and nutrition,the results have not been so clear-cut. Onthe one hand, evaluations of PROGRESA

Rafael Perez Ribas, Fábio Veras Soaresand Guilherme Issamu Hirata,



and Familias en Acción indicate significantreductions in the incidence of childillness and improvements in child height.In Mexico, the supply of nutritionalsupplements for children might be themain reason for this positive impact. InColombia, positive outcomes aresupported by effective enforcement ofthe health check-up conditionality. Incontrast, Bolsa Família’s evaluation showsno evidence of an impact on childnutrition or immunisation. Although ithas raised the number of visits to healthcentres, Paraguay’s pilot programme,Tekoporã, has not managed to increaseimmunisation either.

These results suggest that healthco-responsibilities (“conditionalities”)might be more difficult to enforce andmonitor than educational ones, for tworeasons. First, in poor areas the service-supply constraint is greater in health thanin education. The physical and humanresources required to keep a health centreworking normally pose more challengesthan those required by a school. Second,households in poorer communities aremore reluctant to change their attitudetowards preventive health care thantowards school attendance.

Almost every programme evaluationshows an increase in food acquisition.But rising food consumption does notnecessarily imply an improvement innutrition, because this causal relationshipdepends on other factors such as intra-household allocation and bargaining, aswell as the quality of the diet. BothPROGRESA and Familias en Acción haveincreased food acquisition, along withtotal household expenditure.

Nonetheless, only the PROGRESA hasaffected household expenditure share,as well as diet diversification. Otherprogrammes, such as Bolsa Família, BDH,and PRAF II, have not increased totalexpenditure. In the first two programmes,however, there has been an increase inconsumption of food and child clothingbecause of changes in the expenditureshare of those components.

It is clear that CCT programmes tend toaffect decisions on time and budgetaryallocations, mainly in favour of children.Nonetheless, it is still unclear whetherthese changes stem from incomeincreases caused by the transfer or fromother components of CCT programmes.

The fact that women receive the transferand that co-responsibilities are requiredmight affect household behaviour.Many CCT programmes also havecomplementary activities. These rangefrom informal talks on health andhygiene, nutrition and budget planningto the encouragement of productiveactivities and social participation.

If impacts were mainly explained by therelaxation of the budget constraint (whichallows families to plan their decisions in amore forward-looking manner), then theother components of CCT programmesmight represent an unnecessary cost.But if the monetary transfers were notenough to induce desired changes, othercomponents would be relevant. In thiscase, the cash transfer would simply actas an incentive to encourage families tocomply with the conditionalities and/orto engage in complementary activities.In Mexico, for instance, only 50 per centof PROGRESA’s diet diversification effectwas explained by the monetary transfer(income effect). The remaining effect hasbeen attributed mainly to the talks onhealth and nutrition.

Another important issue related to CCTprogrammes is the role of externalityeffects. Households can be affected bythe mere existence of a socialprogramme and the presence of otherbeneficiaries in their community, whetheror not they themselves are participating.The two most convincing examples ofexternalities are the effects of generalequilibrium, which changes prices andexpectations in the economy, and socialinteraction, which changes households’preferences. Since externality may affectbeneficiaries and non-beneficiaries, thiseffect can either lessen or heighten theprogramme’s potential impact. Forobvious reasons, if this kind of effect isnot taken into account in designing anevaluation, impact estimates may becompletely biased.

Recent studies on PROGRESA have shownthat ineligible households are alsoaffected by the programme. Non-beneficiary households in areas wherethe programme operated have alsoincreased their consumption because ofits effect on the local economy. Moreover,the school enrolment rates of non-eligible children have risen in districtsthat took part in the programme due tothe so-called peer effect.

Similarly, the evaluation of Tekoporãfielded two comparison groups,within- and between-communities, todisentangle the programme’s impact intoparticipation effect (being a beneficiary)and externality effect (being in acommunity where there are beneficiaries).These effects were further decomposedinto “income effect” and “otherprogramme components effect”(see Figure).

The total impact on per capitaconsumption has been negative, despitethe positive effect of both participationcomponents—income and otherprogramme features. The negativeresult is completely due to the externalityeffect, possibly derived from socialinteractions among households. By thesame token, most of the total positiveeffect on household saving is explainedby externality. Tekoporã, therefore, hasencouraged saving in rural areas andconsequently led to a reduction in totalhousehold consumption.

Tekoporã also had a negative impacton food share, mainly because of theparticipation effect caused by otherprogramme components. The externalityeffect has been positive but no incomeeffect was identified. On child-clothingshare, there have been neither incomenor externality effects. The positiveimpact stems entirely from othercomponents of programme participation.The main reason is that the programmeencourages households to spend moneyin the best interest of their children,since the conditionalities are mostlyrelated to child development.

All the components of CCT programmesmay have some effect on the desiredoutcomes, but managers should knowwhich of them are more effective andefficient for the purposes of meetingprogramme goals, and through whichchannels they work. Future impactevaluations can shed some light on theblack-box of CCT programme impacts.

Parker, S. W.; L. Rubacalva and G. Teruel(2008). “Evaluating Conditional Schoolingand Health Programs” in: T. P. Schultz andJ. Strauss (eds), Handbook of DevelopmentEconomics, Amsterdam, Elsevier/North-Holland, 3963–4020.

Ribas, R.; F. Soares and G. Hirata (2008).“Beyond Cash: Estimating Externality andBehavioural Change Effects of a Non-Randomized CCT Programme”. Brasilia,International Poverty Centre, mimeo.


As the previous articles in this issueof Poverty in Focus have discussed,conditional cash transfers (CCTs) havebecome important tools for povertyreduction policies in Latin America.Impact evaluations have shown thatCCTs are efficient in promoting access topublic services and alleviating povertyin the short-term. It might be too early,however, to determine if their effecton human capital will be enough tostop the reproduction of poverty.At the same time, there is a clearneed for better ex ante analysis thattakes account of specific nationalcircumstances and makes it possibleto tackle the tension arising from themultiple objectives pursued by CCTprogrammes (see the article by KarlaParra Corrêa and Rafael Perez Ribas).

First, the managers of CCTs face thechallenge of prioritising the differentgoals that the programmes seek tomeet. There are trade-offs betweenpoverty reduction in the short- andmedium term, and the increase inhuman capital in the long-term. Forinstance, if a programme targets thosesegments of the population with lowrates of school attendance, the effectson human capital might be greater thanif it had targeted poor families ingeneral. But the impact on povertywould be less because large numbersof the poor would not take part in theprogramme. Conversely, if a programmefocuses solely on the (extremely) poor,the transfers would go to children whoare already in school, which may not beefficient in terms of the accumulation ofhuman capital.

Alternatively, poverty reduction couldbe prioritised in the medium-term bydeveloping the productive capacityof adult members of beneficiaryhouseholds. The human capital

objectives should be integrated withcomplementary programmes andactivities that enable families to increasetheir capacity to generate income.Such a medium-term strategy wouldallow families to graduate from theprogrammes. But some tension wouldarise between this approach and onebased on human capital accumulation,since the latter may result in feweropportunities to build and/orincrease the productive capacityof adult beneficiaries.

Another approach is to give priority tothe population affected by the greatestoverlap between poverty and a deficitin human capital. This approach mightlead to an increase in transfers topre-school age children, minimisingthe tension between human capitalaccumulation and poverty relief.It would also tackle poverty in theshort run because of the demographiccomposition of the poorest homes.

Moreover, it would facilitate labourmarket participation among poorwomen, since it lowers the opportunitycost associated with child care. Withregard to human capital accumulation,it would cover the level of education(pre-school) that has the greatest long-term returns in human capital investmentand where the greatest asymmetries ofinformation are likely to be found.

In Latin America, however, pre-schooleducation has the lowest level ofcoverage, a circumstance that highlightsthe need for a careful assessmentof supply-side constraints.

Second, the problems that CCTprogrammes aim to tackle are at leastpartly caused by demand constraints.Empirical evidence showing that mostvulnerable children use fewer health

by Pablo S. Villatoro,Economic Commission for Latin America

and the Caribbean (ECLAC)CCTs in Latin America:Human Capital Accumulationand Poverty Reduction1

There are trade-offs betweenpoverty reduction in theshort- and medium-term, andthe increase in human capitalin the long-term.

Interventions based ondemand incentives should beundertaken when families areforced to make suboptimaldecisions and when thesupply of services can meetall the potential demand.

If a country’s socialprotection strategy givespriority to equity and rights,and it does not regard thelabour market as the onlymeans of access to socialprotection, a cash transferprogramme shouldguarantee a minimumincome for the purposesof social inclusion.

1. This article is based on Villatoro (2007).


and education services is not enoughto warrant the conclusion that anintervention on the demand side willsolve the problem. Hence the need todetermine why there is limited useof public services.

Poor school attainment, for instance,may stem from the fact that familiesunderestimate the benefits of schoolingbecause of asymmetries of informationand/or because they face negativeeconomic shocks. In such cases, parentsprioritise the family’s immediate survivalover future returns from their children’seducation. Interventions based ondemand incentives should therefore beundertaken when families are forced tomake suboptimal decisions and whenthe supply of services can meet all thepotential demand.

Poor quality education and healthservices, however, can seriouslycompromise the impact of interventions.In that event the line ministries will haveto develop initiatives to improve theservices, in close coordination with theCCT programmes. In this context CCTsdo not replace or compete with healthand education programmes; in fact theyare complementary.

Third, the question of whether toestablish conditionalities poses a seriousdilemma. This controversial issue hasbeen at the heart of the discussionabout cash transfer programmes, forfour reasons: (i) there is a debate on therationale of using conditions; (ii) theneed to gain political support from themiddle class; (iii) the lack of conclusiveempirical evidence on the extra benefitsof conditioning; and (iv) the practicaldifficulties of monitoring conditionalities.

De Janvry and Sadoulet (2004) argueif underinvestment in human capitalis caused by market failures, incomeeffect (unconditional transfer) isnot enough to correct them: thebeneficiaries’ behaviour can be moreefficiently aligned with the socialinterest by using conditionalities.Similarly, Handa and Davis (2006)suggest that it is unlikely thatunconditional transfers increasedemand, because of the low monetaryvalue of the benefit and the poor

quality of the services. But if theaim is to alleviate poverty, usingconditionalities makes it harder toachieve that aim, since they limit thebeneficiaries’ freedom of choice andimposes extra costs.

If a programme uses conditionalities,it should seek the most cost-effectivemonitoring mechanisms. In fact,implementing a system to monitorcompliance with conditionalities mightbe a cumbersome task because of thenumber of actors involved (beneficiaries,service providers, programme agencies,local government officials and so on).The system may place an extra burdenon line ministries, mainly because ofthe related technological requirements.Additionally, many programmes alreadyuse complex systems to selectbeneficiaries, which can lessen the timeavailable for monitoring and for inter-ministry coordination.

Another problem may be that bothlocal managers and beneficiaries haveincentives to report full compliance withconditionalities. This behaviour may becaused by unduly stringent supervisionmechanisms or by the need to keep thetransfers. A related issue is identifyingthe appropriate conditionalities to havethe greatest impact.

Conditionalities on school attendancemight not make much sense in middle-income countries whose indicators ofschool access are good. For this reason,it has been suggested that transfersshould be conditional on educationalachievement as a means of improvinglearning outcomes (see the article byMichelle Morais de Sa e Silva on NewYork’s CCT programme).

Fourth, the graduation mechanism isanother hotly debated issue. It shouldbe kept in mind that the phasing-outprocedures used must be consistentwith each country’s social protectionstrategy. For example, if a country’sstrategy gives priority to equity andrights, and it does not regard the labourmarket as the only means of accessto social protection, a cash transferprogramme should guarantee aminimum income for the purposesof social inclusion.

On the other hand, an approach thatfocuses on the programme’s efficiencymight take account of budgetaryconstraints and develop mechanisms tominimise dependence. The question ofgraduation is further complicated by themultiple goals of the programmes andthe practical implementation issues thataffect them. These include the need toinclude more families and maintainpolitical support, and the duration ofexternal credits when the programmesare externally supported. Theses issuesare addressed in Charity Moore’s articleon Honduras and Nicaragua.

To reduce poverty in the short term,cash transfer programmes would haveto impose time limits in order to obviatedependence and graduate beneficiarieswho are no longer poor. A programmethat seeks to reduce poverty in themedium-term requires complementarypolicies that foster the adultbeneficiaries’ autonomous capacityto generate income, as well as policiesthat increase local demand for work.Programmes that focus sharply onbuilding the human capital of childrenand adolescents have to providetransfers until the beneficiaries acquiresufficient human capital to increase theprobability that they will escape povertyin the future.

De Janvry, A. and E. Sadoulet (2004).“Conditional Cash Transfer Programs:Are They Really Magic Bullets?”, Universityof California at Berkeley, Department ofAgricultural and Resource EconomicsWebsite, <http://are.berkeley.edu/~sadoulet/papers/ARE-CCTPrograms.pdf>.

Handa, S. and B. Davis (2006). “TheExperience of Conditional Cash Transfersin Latin America and the Caribbean”,Development Policy Review 24 (5), 513–536.

Villatoro, P. (2007). “Las transferenciascondicionadas en América Latina: luces ysombras”, Economic Commission for LatinAmerica and the Caribbean Website,<http://www.eclac.org/dds/noticias/paginas/1/30291/CEPAL_PabloVillatoro_PTC.pdf>.

If a programmeuses conditionalities,it should seek the mostcost-effective monitoringmechanisms.


Opportunity NYC Family Rewards and Opportunity NYC Spark

Developmentand management

Beneficiaries

Conditionsand rewards

Spark

Department of Education and theAmerican Inequality Lab.

8,000 students from 60 schools throughoutthe city have been chosen to participate.They are either fourth or seventh graders.

“Students in the fourth grade willreceive up to $25 for a perfect scoreon each of 10 interim assessment teststaken throughout the year, up to a total of$250”. “Seventh graders can earn up to $50per test for a maximum payment of$500 per year” (Seedco, 2007).

Family Rewards

Centre for Economic Opportunity, Seedco, MDRC, and selectedcommunity-based organisations.

2,500 families living in Central and East Harlem (Manhattan), Brownsvilleand East New York (Brooklyn), and Morris Heights/Mount Hope and EastTremont/Belmont (the Bronx).

The success of an incentives-based programme such asOpportunity NYC dependspartly on how wellbeneficiaries understandhow it operates, so thatthey can respond to itsincentives as expected.

The programme does notintend to alter the governancestructure of the schoolsystem, nor does it involveinnovative pedagogies or newclassroom teaching practices.

It simply assumes that,by giving students monetaryincentives, it will bring aboutimprovements in test scores.

During a recent public speech atTeachers College, the Chancellor of NewYork City’s Department of Education, JoelKlein, revealed that his department hassought to embrace every educationalexperiment that seems promising.Indeed, New York City, home to thelargest school system in the UnitedStates, has witnessed the establishmentof a very innovative and also controversialexperiment: Opportunity New York City.Currently, the programme is beingimplemented as a two-year pilot, to befunded entirely by private donors, with atotal budget of more than US$50 million.

Why should attention be paid to such anew programme? The reasons can befound in three of its very interestingfeatures: the complexity of its incentivestructure; the strategy used by the city’smayor to try to bypass opposition; andthe implications it may have for educationreforms and other conditional cash transfer(CCT) programmes around the world.

Opportunity NYC comprises three sub-programmes: (i) Opportunity NYC Family

Rewards; (ii) Opportunity NYC Work; and(iii) Opportunity NYC Spark. The latter isthe programme’s main educationalcomponent and is being managedseparately by the city’s Departmentof Education (see Figure).

Opportunity NYC Family Rewards alsoinvolves a number of cash incentivesrelated to school attendance andacademic performance. To be eligible,beneficiaries must: (i) have at least onechild entering fourth, seventh or ninthgrade in a New York City public school inSeptember 2007; (ii) have a family incomeof less than 130 per cent of the federalpoverty level; (iii) have at least one parentwho is a US citizen or permanent legalresident; (iv) live in one of the designatedcommunity districts (Opportunity NYC,2008). The Table presents a comparisonof Spark and Family Rewards, and drawsattention to the different conditions andrewards attached to educational activities.

The two sub-components of OpportunityNYC also differ in the way targeting andregistrations were carried out. Spark’s

by Michelle Morais de Sa e Silva,International Poverty Centre

and Columbia UniversityOpportunity NYC:A Controversial CashTransfer in the North

Condition

95 percent school attendanceper month

Attending parent-teacher conferencesObtaining a library cardImprovement in scores or proficiencyon standardised tests at the elementaryand middle school levelsPassing grade on individual Regentsexams for high school completionParental review of the test anddiscussion with teachers

Reward

$25 per month (elementaryand middle school students)$50 per month (high school students)$25$50$300 per test (elementary school)$350 per test (middle school)

$600

$25


targeting was at the school and gradelevels. Sixty low-performing schools werechosen and, within them, all studentsenrolled in fourth and seventh grades.

In contrast, targeting for Family Rewardswas initially at the community districtlevel. The six poorest community districtsin the city’s five boroughs were chosen:two in Harlem (Manhattan), two inBrooklyn and two in the Bronx. Charitiesand community organisations operatingin each of those districts were thencontracted in order to locate and contactfamilies that met the eligibility criteria.

The family “search process” started withinformation from the Department ofEducation on children enrolled in theeligible grades (fourth, seventh and ninth)who received free or reduced-price lunch(eligibility for which is commonly used asa proxy for poverty in the United States).With that information in hand, thecontracted organisations began lookingfor eligible families in order to completetheir applications for admission to theprogramme. Each organisation wasresponsible for at least 850 familyapplications. From the total applicantpool, beneficiary families were selectedthrough a lottery.

Understanding how these two sub-programmes differ in their operation butoverlap in purpose is fundamental to ananalysis of how likely they are to securethe public support necessary for thescheme to endure and expand in thefuture. It can be argued that the successof an incentives-based programme likeOpportunity NYC depends partly on howwell the beneficiaries understand how itoperates, so that they can respond to itsincentives as expected. In this case,however, the existence of two education-related schemes (Spark and FamilyRewards) may cause confusion and havesuboptimal results—not to mention thecomplexity within each sub-programme,which offer different cash amounts foran array of activities and performanceimprovements (see Table).

A second interesting feature ofOpportunity NYC is that, since it is aprivately funded initiative, politicalacquiescence and legislative approvalwere not needed. In the first pilot phaseno public deliberation took place,since taxpayers are not funding theprogramme. As regards sustainability,

however, what will happen when theinitial budget of US$50 million hasbeen spent? Currently, both conservativesand liberals, as well as most teachers,oppose the programme in principle.Only some very positive evidence fromits impact evaluation may be able tocounter such resistance.

In any case, it should be rememberedthat besides the political lobbying thatteachers can undertake through theirunions, there are various ways in whichthey can exhibit their opposition in theirown classrooms. For instance, they canrefuse to provide beneficiary studentswith the extra teaching support theyneed in order to gain better grades andreceive cash rewards.

Additionally, what would be the futureimplications of a successful OpportunityNYC? Note that the programme does notintend to alter the governance structureof the school system, nor does it involveinnovative pedagogies or new classroomteaching practices. It simply assumes that,by giving students monetary incentives,it will bring about the improvements intest scores that educational policymakershave wanted for so long. Given theinfluence of positive evaluation results,therefore, and frustration in the UnitedStates with past education reforms, thereare reasons to believe that if OpportunityNYC succeeds it may induce a change inthe focus of education policies. Concern

may shift from improving teacher qualityand accountability to raising demand bybuying student motivation and effort.

Those repercussions may spread beyondNew York City, “contaminating” not onlyother US cities and states but also CCTsin the developing world. Unfortunately,more often than not, programmes andpolicies are transferred from onecountry to another for political andeconomic reasons, frequently withdisregard for their suitability to thenew contexts in which they will beimplemented (Steiner-Khamsi, 2004).Countries should therefore be wary:much prior scrutiny and accompanyingsupply-side measures are needed beforeperformance-based conditionalities canbe introduced. Betting on cash rewardsfor academic performance, withoutassuring access and quality, can be atrue waste of public money.

Opportunity NYC (2008). “Who Can Apply?”Opportunity NYC Website,<http://www.opportunitynyc.info/who%5Fapply%5Fen/>(accessed 8 January 2008).

Seedco (2007). “Mayor Bloomberg ReleasesIncentives Schedule for Opportunity NYC,Aimed at Helping New Yorkers Break theCycle of Poverty”. Seedco Website,<http://www.seedco.org/newsreleases/newsrelease.php?id=49>(accessed 20 November 2007).

Steiner-Khamsi, G. (2004). The GlobalPolitics of Educational Borrowing andLending. New York, Teachers College Press.


Social cash transfers (SCTs) arerelatively new social protectioninstruments in East and Southern Africa(ESA). In the HIV and AIDS policy dialoguein particular, the “protective” dimensionof programming increasingly calls for theuse of SCTs to support families that carefor orphans and other children affectedby AIDS (UNICEF and UNAIDS, 2004). AIDSexperts advocate such programmesbecause AIDS is the leading cause ofprime-age mortality in sub-SaharanAfrica (SSA) and the region has 25–30million orphans, a third of whom havelost a parent to the disease.

AIDS-related prime-age adult mortalityhas caused a dramatic decline in lifeexpectancy rates in the region, and hasseverely weakened family supportsystems already stretched thin by extremechronic poverty. In this context, SCTs areincreasingly being demanded as AIDS-mitigation measures, to help familiescope with growing dependency ratiosand the associated burden of care, andto protect the health and human capitaldevelopment of orphans in particular.

The largest cash transfer programme forchildren in ESA is South Africa’s national

child support grant, which reaches morethan 9 million children. Several countrieshave smaller programmes, eitherdemonstrations (Kenya, Malawi, Zambia),or established programmes with lowcoverage (Mozambique). Lesotho iscurrently designing a SCT that targetsorphans and vulnerable children, whileboth Botswana and Namibia have eitherin-kind or cash assistance programmesfor families that care for orphans.Several other countries are currentlyconsidering SCTs on a trial basis,including Angola, Rwanda, Tanzania,and Uganda. Such programmes,therefore, are very much part ofthe social policy dialogue in ESA.

As momentum gathers around SCTs inESA, there are many technical questionsabout programme design parameterssuch as targeting, transfer levels andoverall affordability. As regards orphans,an important policy question is how toexpand such programmes so that theyreach the children most in need ofassistance. Should governments explicitlytarget households with orphans forreceipt of cash assistance? Or shouldthe programmes focus more broadlyon poverty as the key underlyingdeterminant of vulnerability?

To answer these questions, we usemicro-simulations to determinewho would be reached underdifferent targeting schemes in termsof demographics and poverty, usinghousehold surveys from selectedcoutnries. The schemes analysedare stylised versions of those currentlyoperating in ESA: (i) labour-constrainedhouseholds (Malawi, Zambia);(ii) households with elderly or disabledmembers (Mozambique); (iii) householdswith orphans (Botswana); and(iv) households with children (Kenya).A fixed budget of 0.5 per cent of GDP,with 20 per cent administrative costs,is used. A flat transfer of 30 per cent of

by Sudhanshu Handa,UNICEF Regional Office for Eastern and

Southern Africa and Scott Stewart,University of North Carolina at Chapel Hill

The Orphan TargetingDilemma in Easternand Southern Africa

Targeting households withchildren has a greater impacton school enrolment thanother targeting strategies.

The experience of fourcountries in Southern Africademonstrates that an orphan-targeting approach reachesmore orphans but excludesmany of the poorest children,since orphans are notnecessarily clustered in thepoorest consumption decile.

In Malawi, targetinghouseholds with childrenyields an increase inenrolment of five percentagepoints among children aged6–17, while targetinghouseholds with orphansyields an increaseof 4.2 points.


median consumption of the bottomquintile in each country is provided.

A subset of these results, focusing onMalawi and Uganda, is shown in Figures1 and 2. These usefully illustrate thepolicy trade-off faced by governmentsin ESA as they seek to protect the mostvulnerable children through targetedSCTs. The first two bars in each clustershow the percentage of all children andall orphans reached in the poorest decile.The last two bars show these samepercentages for the lowest three deciles.

In general, more children of any kind arereached by either the child- or orphan-centred scheme in the two countriesshown, particularly children in thepoorest consumption decile. In bothcountries the orphan scheme reaches allorphans in the bottom decile, but fewerchildren in that decile. In Malawi, forexample, the orphan scheme reachesonly about 25 per cent of children inthe poorest decile, as it does in Uganda.This illustrates the potential trade-offin targeting poor families with childrenversus those with orphans only.

The trade-off becomes less clear when allchildren in the bottom three deciles areconsidered. In Uganda, for instance, if thebottom three deciles are taken together,then the “coverage” of the orphan schemeamong all children is about the same asthe child-focused scheme—but thecoverage of orphans is significantly higher.The same is true in Malawi: the coverageamong all children in the bottom threedeciles is about the same in both schemes,but the coverage of orphans is higher inthe orphan-focused scheme.

Hence it is only when the focus is onthe ultra-poorest children—those in thebottom decile—that the distinctionbetween the two schemes (child-focusedversus orphan-focused) becomesapparent. If policymakers give greaterweight to this group, and if goodtargeting is possible, then the scheme thatfavours children over orphans will reachmore children in the poorest decilerelative to an orphan-targeted scheme.Such a scheme would also reach about 50per cent of orphans in the bottom decile.

In all four countries, the proportionalgain in per capita consumption amongrecipient households is higher for

strategies that target children explicitly,as compared to strategies that targetlabour-constrained, age- and disability-vulnerable or orphan households.In Malawi, for example, the increase inrecipients’ consumption is 40 per cent forthe orphan scheme but 48 per cent forthe child-focused scheme; in Uganda thecorresponding figures are 34 and 48 percent, respectively.

This underscores the fact that the child-focused scheme connects with poorerhouseholds, suggesting that orphans arenot necessarily clustered in the bottomconsumption decile. Similar results areobtained when the squared poverty gap(SPG) is analysed—this is the povertyindicator that is most sensitive to changesin welfare among the very poorest. In allfour countries the greatest improvementsin SPG are brought about by strategies thattarget households with children, whilestrategies that target labour-constrainedhouseholds have the least effect.

Simulations of the impact of SCTs onschool enrolment were also estimatedwith these data, using a probit modelto estimate the relationship betweenexpenditure and schooling, and includingstandard control variables such as theeducation of the household head, the ageand sex of the child, region of residenceand distance to the nearest school. Theestimates were made for the targetpopulation—the bottom three deciles ofthe consumption distribution—in orderto obtain relevant behavioural responses.

In all countries, a comparison of theestimated impact across targetingstrategies indicates that reaching

households with children has a greaterimpact on school enrolment than otherstrategies. In Malawi, for example,targeting households with childrenyields an increase in enrolment of fivepercentage points among children aged6–17, while targeting households withorphans yields an increase of 4.2 points.Other schemes yield lower increases inschool attendance because they reachfewer children, and those they do reachare relatively affluent.

SCTs in ESA that target households withorphans reach the highest number oforphans, but they include householdsin the third consumption decile whileexcluding many of the poorest childrenliving in the bottom two deciles.Targeting poor families with children,however, leads to a greater concentrationof resources among the very pooresthouseholds and the highest coverageof children in the bottom decile. Thishighlights the key dilemma faced bypolicymakers in a context where socialprotection is driven by the HIV andAIDS-mitigation agenda. There is a trade-off between pure poverty targeting, ortargeting poor households with children,and targeting households with orphans.This trade-off is particularly importantwhen the focus is on the ultra-pooresthouseholds—those in the bottomconsumption decile.

Schubert, B. (2007). The Impact of SocialCash Transfers on Children affected by HIVand AIDS. Nairobi, UNICEF-ESARO.

UNICEF and UNAIDS (2004). The Frameworkfor the Protection, Care and Support ofOrphans and Vulnerable Children Livingin a World with HIV and AIDS. New York,UNICEF/UNAIDS.


The legal basis of the transferscheme is not strong enoughfor citizens to claim theirentitlements, and currentfunding levels would haveto increase dramatically fora national programmeto be established.

Social programming inZambia stresses earlygraduation rather thaneffective poverty alleviation,though without adequatefunding for such programmes.

Social assistance programmesare the first to be trimmed inthe event of budgetarydifficulties, and activeadvocacy is crucial tosustaining them.

by Esther Schuering,Deutsche Gesellschaft für Technische

Zusammenarbeit (GTZ)Social Cash Transfersin Zambia:A Work in ProgressZambia was one of the first countryto try social cash transfers. This was anovelty in a country where other formsof support were erratic and irregular.

There were questions about theimplementing agency, the Ministryof Community Development and SocialServices (MCDSS). The ministry has neithera large pool of experienced and trainedofficers nor the political influence toeffect greater policy changes. All theseuncertainties made piloting seem theobvious choice. Piloting would allow aradical approach to be tested; evidencecould be collected; policymakers,implementers and the public could besensitised; and implementing capacityand structures could come under scrutiny.

Now, four years after the KalomoSocial Cash Transfer Scheme wasofficially launched, it is time toassess whether it has been merely aninteresting learning experience for socialassistance programming or whether it willcontinue as a nationwide programme.

Trial and Error: The social cash transferscheme was set up in Kalomo district

towards the end of 2003 as anintervention aimed at householdsaffected by HIV/AIDS and to make thesupport provided through the PublicWelfare Assistance Scheme (PWAS) morecost-effective. The first results of thetest were promising. The scheme wasofficially launched in May 2004 andthen extended to the rest of the district.The constant adjustments to the Kalomoscheme were necessary, but they alsoposed a challenge for the MCDSS. TheMinistry’s structures and capacities, aswell as its lack of performance-basedincentives, were not conducive to theeffective management of the programme.Mini-pilot initiatives for a performance-based incentives scheme, a managementinformation system, and varioustraining programmes were meantto strengthen these rather fragilemanagement structures.

The Quest for Impact: The first impactevaluation of Kalomo allowedpreliminary conclusions on howhousehold conditions had changed.Of particular note were:

higher satiation levels after meals(households still hungry after eachmeal decreased from 56.3 per centto 34.8 per cent);greater variety in food intake(more households consumingvitamins and proteins in the formof vegetables, fruit, fish and meat);reduced incidence of sickness(from 42.8 per cent to 35 per cent);increase in asset ownership(ownership of goats increasedfrom 8.5 per cent of householdsto 41.7 per cent); andenterprising attitude (four times morehouseholds investing, and a doublingof the amounts invested).

The first impact evaluation lacked acontrol group, which proved particularlyproblematic during the drought year ofthe assessment. A second evaluation wastherefore commissioned to secure better

Cash Transfer Pilots in Five Districts: Reviewing Policy Options

Kalomo Capacity requirements for implementation at local, district, provincialand national level.

Development of training modules and planning tools to extend thesocial cash transfer scheme to other districts.

Combination of the regular PWAS and cash transfers.

Kazungula Retargeting and graduation mechanism.

Implementation in a remote and sparsely populated district.

Monze Soft conditionality in health and education.

Implementation of the social cash transfer without directtechnical assistance.

Chipata Urban transfers: expansion requirements and governance issues

Transfer value (school bonus).

Katete Universal age-based targeting.


Social Cash Transfer Scheme in Zambia

Implementing institution: Ministry of Community Development and Social Services.

Target group: Option 1: households that are destitute (no regularexternal support, no productive valuable assets,no substantive income) or incapacitated (more thanthree dependents for every productive member).Option 2: elderly above the age of 60,possibly means-tested in the future.

Targeting system: Community-based targeting with checksand balances.

Payment system: Pay points operated at schools or health centres bygovernment workers.

Transfer amount: Option 1: US$10 per household, US$2.5 for children,paid bimonthly.Option 2: US$15 per pensioner.

Monitoring: Decentralised internal monitoring system.

Evaluation: At present, two impact evaluations(Kalomo 07 and Kalomo/ Kazungula/Chipata 08).Third evaluation (Monze) imminent. Additionally,analysis of design features such as targeting, payment,management and conditionalities.

data. But most impacts are long-term inprogrammes like this and will only becomeapparent over the medium and long run.

At the same time, impact evaluationsfrom comparable programmes, such asin Malawi, may legitimately be used tosupport arguments in favour of suchinterventions. Hence research does notstop at the country’s border.

Analysing Policy Options: The pilotregion now includes five districts,and Zambia is currently examining thedifferent needs of a peri-urban scheme.The plan is to review different targetingmechanisms (community-basedtargeting versus a universal old-agepension scheme), explore distributionmechanisms other than the pay-pointsystem (such as smart cards andmobile banking), and determine ifsoft conditionalities are an added value.The different pilots are meant to informthe design of a national scheme, which theMCDSS envisages for this year.

Institutionalisation: The danger of anypilot scheme is that it is an isolatedsolution that is not well integrated intoexisting systems and overall policies.Usually, pilot schemes do not have a legalbasis. In Zambia, social cash transfers arerooted in the social protection strategyand the national development plan, andthey are also mentioned in social welfareand social security policies. The MCDSShas even created a separate budget linefor them. Hence there is awareness thatsocial cash transfers cannot be stand-alone efforts.

Additionally, the first attempts have beenmade to merge social cash transfers withother social assistance initiativesmanaged by the Ministry, and toexamine complementary programmes.But the legal basis is not strong enoughfor citizens to claim their entitlements,and the funds currently providedwould have to increase dramaticallyfor a national programme to beestablished (more than twice theMinistry’s present budget would beneeded for a national programme).

Political Will in Slow Motion: While theMCDSS has become an active advocatefor social cash transfers, the Ministryof Finance has not yet authorised anational programme. Poverty reductionis still supposed to be a consequence

of growth, and social programmingstresses early graduation rather thaneffective poverty alleviation.

Civil society has tried to enter into adialogue with the Ministry of Finance,but it struggles to make its voice heardand to induce a re-thinking. Thesituation is further complicated becausepolitics in Zambia is sometimespersonalised. This is especially trueif individual actors with substantialdecision-making power do not favour theprogramme irrespective of its results.

Although social assistance is part of thenational development plan and socialwelfare policy, the government is notrequired to honour its obligations.It can be assumed that social assistanceprogrammes are the first to be trimmedin the event of budgetary difficulties.

Active advocacy, involvement of membersof parliament and the constitutionalreview commission, will help sustain theprogramme. Further cooperation with civilsociety and dialogue with the Ministry ofFinance are all part of an effort togenerate the necessary political will.

Time to Expand? The MCDSS is currentlyorganising a review in order to take a

critical look at all the lessons learned.While it is always tempting to continueat a small scale. A decision to continuethe pilot phase can also lead to aneternal pilot. What is needed is for theMCDSS, on the basis of research andevaluation, to drive the process further.

Support from civil society and themedia can help raise interest amongparliamentarians, who may make acase for social cash transfers for thepurposes of their political agenda.There is a window of opportunity toengage in an effective dialogue withthe Ministry of Finance.

It is also important to keep in mind thatthe end of a pilot does not mean the endof lesson-learning. Since any expansionof the programme would be gradual,there would still be ample room to makeadjustments to its design. In Zambia, thedecision on expansion now hinges on thecapacity of the MCDSS to take advantageof this window of opportunity in order tocreate more political, institutional andfiscal space by means of the appropriatestrategy in the areas of advocacy,communication and capacity building.

References for this article are found at:<www.socialcashtransfers-zambia.org>.


Social pensions are designed toaddress old-age poverty. They are non-contributory cash benefits paid to olderpeople, either universally or sometimessubject to a means test. Botswana,Lesotho, Mauritius and Namibia payuniversal pensions. South Africaprovides a means-tested pension buthas begun a process that is likely to leadto the elimination of this cumbersometargeting mechanism. There is anemerging consensus in Southern Africathat social pensions should be universal.A growing body of evidence in severalSouthern African countries demonstratesthat social pensions not only tacklepoverty broadly but also contribute topro-poor economic growth. Researchshows that social pensions in thesecountries reduce hunger and extremepoverty while improving health care,education and gender equality.

Household survey evidence revealsthat older people in Africa are oftendisproportionately poorer than the rest ofthe population. In 1997, for example, thepoverty rate for older persons in Kenyawas nearly 50 per cent, compared to 45per cent for the population as a whole.The severity and depth of poverty arealso often higher among the elderly.

The social pension in South Africareduces the country’s overall poverty gapby 21 per cent, and by 54 per cent forhouseholds with older people.The pension virtually eliminates thepoverty gap for households with onlyolder members—a reduction of 98 percent. In Mauritius, the share of older-people households below the povertyline is 64 per cent without the socialpension, but only 19 per cent with it.Income poverty is significantly reducedacross all age groups.

Simulation results for African countriesshow that a social pension would reducethe poverty rate for older people by 13

per cent to 19 per cent. Social pensions,especially if indexed to inflation, can playa critical role in cushioning the pooragainst rapid increases in the price ofbasic commodities, particularly food.

Additionally, an emerging evidencebase from Africa reveals several channelsthrough which social pensions contributeto economic growth. First, social pensionsmobilise one of the most under-usedresources in many developing countries:the skills of older people in allocatinghousehold resources. Extensive studieshave documented how social pensionsincrease human capital investment forchildren, particularly in terms of nutrition,health and education. Second, socialpensions relax household liquidityconstraints and contribute to investment.Third, these regular income transfersprovide a mechanism that helpshouseholds to manage social risk,encouraging productive behaviour—particularly labour market participation.Fourth, in many countries, socialpensions foster changes in spendingpatterns that reinforce economic growth.Fifth, social pensions enhance socialcohesion and political stability.

While social pensions directly targetpoor older people, many of the resourcessupport human capital development forchildren and help them grow into moreproductive adults. In South Africa,children in households that receive thesocial pension are more likely to attendschool and succeed academically thanchildren in similar households that donot receive the grants. Children(particularly girls) in householdsreceiving pension payments are alsomore likely to have better health andnutrition indicators. Social pensionsprovide critical support for the increasingnumber of older persons acting asprimary caregivers for orphans andother vulnerable children, a demographicchange exacerbated by HIV and AIDS.

In South Africa, children inhouseholds that receive thesocial pension are more likelyto attend school and succeedacademically than children insimilar households that donot receive the grants.

Social pensions provide theregular income security thathouseholds need to managesocial risk and invest in high-return activities

The social pensions inBotswana and Namibiaabsorb 0.4 percent of GDPand 0.7 percent of GDPrespectively. Simulationresults show that Kenya canprovide a social pension to allpersons aged 55 and abovefor 1 per cent of GDP.

by Michael Samsonand Sheshangai Kaniki,

Economic Policy Research InstituteSocial Pensions asDevelopmental SocialSecurity for Africa


Sixty per cent of pensioners in Lesothocare for children who are studying atschool or college. Pension money is usedto buy uniforms, books and stationery.The pension in Lesotho is also importantfor the nutrition status of recipienthouseholds. Before receiving the pension,one in five recipients responded thatthey never had enough food to satisfytheir hunger. This dropped to one in tenfollowing the introduction of the socialpension, while the proportion alwayshaving enough food rose from 36 percent to 46 per cent.

Social pensions provide the regularincome security that households needto manage social risk and invest in high-return activities. Some older people inNamibia, for example, use their socialpension to invest in livestock and otheragricultural activities. In South Africa,the social pension supports access tocredit, funds the renting of capitalequipment, and finances inputs foragricultural activities.

Social pensions reduce the downsiderisk of job search and also relax liquidityconstraints. They enable workers toinvest in more productive job search,providing the critical support theyneed to look for decent work andavoid attaching themselves to the worstforms of labour. They allow the pooresthouseholds to avoid less efficientinsurance mechanisms and improveemployment prospects by reducing therisk and cost of job search. These grantsalso directly support productivity-enhancing expenditures such asnutrition and access to transport services.

South African households receivingsocial pensions and other transfers aremore likely to participate in the labourforce and have more success in securingemployment. This impact is significantlygreater for women in the pooresthouseholds. The old-age pension inSouth Africa is also associated with areduction in child labour, since childrendo not need to work and they receiveeducational support. Twenty-one percent of social pension recipients inLesotho spent part of their grant incomecreating jobs, ranging from generalhousehold chores to farm work.

Social pensions help finance women’smigration for job search and help older

people care for the workers’ children,leading to positive and significantemployment impacts for female labourmigrants. These results corroborate earlierstudies showing positive labour marketimpacts, and indicate that social pensionsprovide crucial resources for job search.

Social pensions can stimulate demandfor local goods and services. In SouthAfrica, social pensions shift thecomposition of national expenditurefrom imports to local goods, increasingsavings and economic growth. In Namibia,the spending power created by socialpensions supports the developmentof local markets and revitalises localeconomic activity. As one Namibianobserved, “the wheels of the localeconomy begin to turn on pension day”.

In the middle of the last century,Mauritius had a vulnerable mono-cropeconomy and high poverty rates. Today,it has the lowest poverty rate in Africa.An International Monetary Fund report,“Who Can Explain the MauritianMiracle?”, recognises a number of inter-related reasons for this, including thesocial pension established in 1950 thathelped create the social cohesionneeded to restructure the economyonto a high-growth path.

Similarly, Botswana’s social pension is thegovernment’s most effective mechanismfor tackling poverty and supporting thesocial stability that has encouraged thehigh investment rates required to driveAfrica’s fastest-growing economy overthe past three decades. The national cashtransfers system in South Africa (of whichthe social pension is a major component)significantly reduced inequality, loweringthe Gini coefficient from 0.80 to 0.73.

Governments can design social pensionsin line with available fiscal resources.The size of the transfer and the eligibilityage are two variables that can becalibrated to ensure affordability.The social pensions in Botswana andNamibia absorb 0.4 per cent of GDPand 0.7 per cent of GDP, respectively.Simulation results show that Kenya canprovide a social pension to all personsaged 55 and above for 1 per cent of GDP.

Evidence from Southern Africademonstrates that social pensionsconstitute the governments’ mosteffective poverty-reducing intervention.They are also an affordable investmentin pro-poor economic growth and astarting point for an effectiveand comprehensive system ofdevelopmental social security.

Suggested literature related to this article

Cichon, M. and R. Knop (2003). Mission Report, Windhoek, Namibia 19-26 January 2003(page 8, box: “Paying Pensions in Okuvimburi, Omaheke Region, Namibia”). Joint ILO/Luxembourggovernment mission.

Croome, D. and M. Mapetla (2007). The Impact of the Old Age Pension in Lesotho: Pilot Survey Resultsof Manonyane Community Council Area, Roma. Roma, Institute of Southern African Studies.

Devereux, S. (2001). “Social Pensions in Namibia and South Africa”, IDS Discussion Paper,No. 379. Brighton, IDS.

Duflo, E. (2003). “Grandmothers and Granddaughters: Old Age Pensions and Intra-householdAllocation in South Africa”, Research Paper Series. Cambridge, Massachusetts,Massachusetts Institute of Technology.

Edmonds, E. V. (2004). “Does Illiquidity Alter Child Labour and Schooling Decisions? Evidence fromHousehold Responses to Anticipated Cash Transfers in South Africa”, NBER Working Paper Series,No. 10265. Cambridge, Massachusetts, NBER.

Kakwani, N., H. H. Son and R. Hinz (2006). “Poverty, Old-Age and Social Pensions in Kenya”,International Poverty Centre Working Paper Series, No. 24. Brasilia, International Poverty Centre.

Roy, D. and A. Subramanian (2001). “Who Can Explain the Mauritian Miracle: Meade,Romer, Sachs, or Rodrik?”, IMF Working Paper, No. 01/116. IMF, Washington, DC.Available at: <http://www.imf.org/external/pubs/ft/wp/2001/wp01116.pdf>.

Samson, M., U. Lee, A. Ndlebe, K. MacQuene, I. van Niekerk, V. Gandhi and T. Harigaya (2004).“The Social and Economic Impact of South Africa’s Social Security System”,EPRI Research Paper Series, No. 37. Cape Town, EPRI.

Statistics South Africa (2008). Income and Expenditure of Households 2005/2006: Analysis of Results.Pretoria, Statistics South Africa.

Willmore, L. (2004). “Universal Pensions in Low Income Countries”, Initiative for Policy DialogueWorking Paper Series. New York, Columbia University.


Many African governmentsallocate less than 1 per centof GDP for pensions, othercash transfers and in-kindsocial assistance.

A basic social securitypackage is demonstrablyaffordable in Africa, butits implementation requires ajoint effort by the countriesand the internationaldonor community.

The Case for Basic Social SecurityWe know that social security is adeclared human right. It is acceptedas part of an international labourstandard. We know from worldwideexperience, both historical and current,that social security is a powerful toolnot only to alleviate poverty, but alsoto reduce inequality (ILO, 2008a).

The experience of all developed marketeconomies has proved that socialsecurity is an indispensable partof any efficient market economy.Countries in Africa urgently need todevelop and put in place basic socialsecurity provisions.

How Much Would It Cost?Many studies have analysed the possiblecosts of a basic social security packagefor low-income countries, including

those in Africa. For example, a recentstudy by the International Labour Office(ILO, 2008a) looked at the costs of basicpackage consisting of:

universal access to essential healthcare services;universal, basic old-age anddisability pension;basic child benefits for the firsttwo children; andbasic social assistance providing a100-day employment guarantee tothe poorest 10 per cent of householdheads of working age.

As Figure 1 shows, the non-health partof the package would cost (in expected2010 demographic and economicconditions) between 3 and nearly 6 percent of GDP. Financing universal accessto essential heath care would requireadditional resources: between 1.5 percent of GDP (Guinea) and 5.5 per cent(Burkina Faso).

The cost of the whole package would bebetween 5 and 10 ten per cent of GDP,depending on a country’s particularconditions. Another ILO study(ILO, 2008b), conducted as a part ofthe social protection expenditure andperformance review in Zambia, analysedthe cost of a similar package ofhypothetical cash benefits (but with thechild benefit limited to the first child,and thus much less costly). It showedthat in the longer run it would cost nomore than 1.5 per cent of GDP, excludingadministrative costs.

A similar exercise for Tanzania(ILO, forthcoming) put the costs forthe same package at a little more than1.8 per cent of GDP.

by Krzysztof Hagemejer,ILO Social Security Department,

GenevaCan African CountriesAfford BasicSocial Security?Can They Afford Not To Have It?

Source: ILO calculations.


How Can the Necessary Resourcesbe Found?The total government spending(including social security funds)of lower-income countries in sub-Saharan Africa is 25–30 per cent of GDP.Most of these countries, however,allocate a very small percentage ofthe available domestic and externalresources to financing the provisionof social security.

Many countries allocate less than1 per cent of GDP for cash transfersand in-kind social assistance. All but afew governments allocate less than2 per cent of GDP (Figure 2).

Even if a larger portion of the totalavailable public resources is allocated tosocial security benefits in some of thesecountries, most of the benefits reachonly a small part of the population—inmost cases, only government employeesand those in the private sector whohave regular contractual employment.Virtually none of the benefits go tothe majorities, those working insubsistence agriculture and the urbanpoor. In Zambia and Tanzania, forexample, governments and donorsallocate the equivalent of less than0.2 per cent of GDP to all current socialassistance programmes.

Even with current resources, there isa potential fiscal space to provide thefinancing necessary to build up basicsocial security systems and graduallyreach all of those in need. But achievingthat would require shifts in the currentallocations of budgetary resources.

This requires:Rationalising existing socialprogrammes, by making them lesscostly and/or more effective inmeeting poverty reduction goals—that is, integrating or coordinatingcurrent social assistance or socialinsurance programmes to avoidoverlap and waste; cuttingadministrative costs in existingcontributory pension programmes;and improving design and overallgovernance.Reassessing all current governmentspending programmes to determinewhether they serve the broader

policy objectives of reduced povertyand inequality (for example, is theresufficient economic justification forfuel subsidies, which are “cash” transfersto the rich?).

Most Sub-Saharan African countriesincreased domestic revenue on averagefrom 15 per cent of GDP in 1997 to 19per cent in 2006, mainly through moreeffective tax collection. The tax base willhave to be significantly broadened andtax systems will have to be reviewed andmodified, in order to secure themaximum resources.

The Way ForwardAs countries attain higher levels ofeconomic development, their socialsecurity systems can advance in parallel,extending the scope, level and qualityof the benefits and services provided.A basic social security package isdemonstrably affordable, but itsimplementation requires a joint effort:the low-income countries would have toreallocate existing resources and raisenew ones, and the international donor

community would have to refocusinternational grants on direct financingof social protection benefits, onstrengthening the administrativeand delivery capacity of national socialprotection institutions, and on providingthe necessary technical advice.

Several low-income countries in Africaand elsewhere have started to take thesesteps (recent developments in countriessuch as Mozambique, Nepal, Tanzaniaand Zambia are just a few examples), andthere are signs that the process willaccelerate in the near future.

ILO Social Security Department (2008a).“Can Low-Income Countries Afford BasicSocial Security?”, Social Security PolicyBriefings, Paper No. 3. Geneva, ILO.

ILO Social Security Department (2008b).Social Protection Expenditure andPerformance Review and Social Budget.Zambia. Geneva, ILO.

ILO Social Security Department(forthcoming). Social Protection Expenditureand Performance Review and Social Budget.Tanzania. Geneva, ILO.

Source: ILO Social Security Inquiry and IMF Government Finance Statistics.


by Karla Parra Corrêaand Rafael Perez Ribas,

International Poverty CentreNeeds Assessments:Why They Are Important forCCT Programmes

Needs assessmentsare valuable tools forplanning and managingCCT programmes.

A needs assessment wouldreveal whether, when sendingtheir children to school, poorhouseholds face costs relatedto forgone domestic or othereconomic activities.

A comprehensive needsassessment based on schooldata can help the differentneeds to be placed in priorityorder, so as to ensure betterplanning and more effectiveallocation of resources.

As the previous articles have shown,conditional cash transfer (CCT)programmes ensure that poorhouseholds have a minimum level ofincome, and thus such initiatives can beeffective in alleviating poverty. Moreover,the existence of conditionalitiesintroduces direct links between impactson income poverty and results in otherareas, such as education and health.

CCT programmes, however, mightnot always meet their stated goals.In some circumstances their design andimplementation might not be properlytailored to local social, economicand institutional conditions. In orderto address those conditions moreeffectively, ex ante assessments ofgaps and needs are crucial.

Needs assessments are meant to provideempirical evidence on the state of accessto social services, institutional capacitiesto administer the programmes and theiraffordability. Policymakers can thenevaluate the relevance and feasibilityof programmes before they areimplemented. Needs assessmentsare valuable tools for planning andmanaging CCT programmes.

A needs assessment seeks to measurethe extent and nature of a particularpopulation’s needs and the services thatare required. When identifying shortfallsin access to basic services, evidence ofthe profile of the population excludedfrom a service and the reasons for theexclusion should be highlighted.

Sectoral analyses, for instance, canidentify whether access to social servicesis at a desired level or if there is anyshortfall. Such analyses provideprogramme designers with informationon access constraints and on whichimprovements are required. For example,

a CCT programme might aim to improveprenatal care among poor women. But ifalmost every pregnant woman regularlyuses such a service, that programmecomponent will not be relevant.

A needs assessment may reveal thatpoor school attendance could be due toboth demand and supply factors. On thedemand side, household income andfamily background are the mostsignificant determinants of schooling.The poorer and less educated theparents in a household, the higherthe opportunity cost of putting theirchildren in school.

Even when education services areaccessible and affordable, householddecisions about child schooling are madeaccording to the immediate cost and theexpected longrun return. A needsassessment would reveal whether, whensending their children to school, poorhouseholds face costs related to forgonedomestic or other economic activities.

Needs assessments can also offerex ante evidence of how an increasein household resources affect schoolattendance and achievement, theso-called income effect of a cashtransfer programme.

However, income is not the onlydeterminant of school attendance andachievement. Parent’s education andother family background features alsomatter. Lloyd and Blanc (1996) show forsome selected African countries that theeducation of the household head alsodetermines the educational outcomes oftheir offsprings. To address these typesof determinants, some cash transferprogrammes have included conditioningcomponents, since the cash alone mightnot be enough to neutralize the parentalbackground effect.


Evidence from aneeds assessmentexercise on the profileof a population that isexcluded from a serviceis also essential forchoosing the propertargeting methodto be used.

Based on the assessment of the supply-side determinants, governments mayfocus on increasing the number ofschools and related facilities, and onimproving the quality of education.In this regard, a comprehensive needsassessment based on school data can helpthe different needs to be placed in priorityorder, so as to ensure better planning andmore effective allocation of resources.

CCT programmes are usually based onencouraging the demand (household)side of access to public services.Nonetheless, it is widely acknowledgedthat social gaps are not only determinedby demand factors.

Scarcity of facilities and poor servicequality also explain why there are highrates of child mortality and malnutrition,and why most children are not in school.In rural Mozambique, for example,building more schools has a greaterimpact on primary school attendancethan programmes that increasehousehold income (Handa, 2001).A needs assessment can provide suchinformation, indicating whether theconstraints are on the supply ordemand side.

CCT programmes are, in general,perceived as a demand side intervention(see article by Pablo Villatoro in thisissue). However, due to the recognitionthat supply-side constraints mightjeopardise their success, manyprogrammes have already beenapplying the word “co-responsibility”rather than “conditionality” tohighlight governments’ responsibilityin addressing supply-side shortcomings

In Honduras, the Programa de AsignaciónFamiliar (PRAF II) included a supplycomponent. However, an ex anteevaluation, which is part of a needsassessment, shows that primary schoolcoverage has no significant impact onschool attendance among boys, acircumstance explained mainly by familybackground and the availability ofpre-school facilities.

Increasing supply has a significantimpact only on school attendanceby girls. In this case, a cash transferprogramme with conditionalities would

be appropriate because there is a groupof children whose attendance is notaffected by improvements in the supplyof primary schools (Ribas et al., 2008).

A profile of the population that isexcluded from a service is also essentialfor choosing the proper targeting methodto be used. Efficiency in resource-allocation is related to whether and howthe programme is targeted.

On the one hand, targeting methodsentail efficiency gains given the sameamount of transfers. On the other hand,they also involve some costs. When agood targeting mechanism is veryexpensive for a specific country, thecountry could be advised to adopt aless expensive method, even if it is lesstechnically complex, that gives more fiscalspace to provide benefits to other poorhouseholds. Such a decision will surelydepend on local constraints. It can alsoraise political concerns about the methodof targeting and calls for the managementof risks. In this case, different scenariosmay have different costs that could beoutlined in a prior needs assessment.

Another issue that must be assessedbefore implementing a CCT programmeis the capacity of the institutionalsettings. Targeting mechanisms, paymentsystems, and the monitoring andenforcement of co-responsibilitiesdepend on institutional capacity.

In Brazil, for instance, the decentralizedtargeting system works because therehad already been local systems formanaging social policies beforeBolsa Família.

In other countries without a similarbackground, such a system might resultin clientelism if central governmentguidelines are poorly enforced at thelocal level. Such capacity for implementinga centralized or a decentralized systemcan be evaluated by a needs assessmentbefore the programmes are implemented.

With regard to basic social protectioninterventions, such as CCT programmes,affordability is another source ofdiscussion. Policymakers may drawattention to all kinds of costs involvedand the sources of financing.

The fiscal space surrounding theimplementation of a CCT programmedepends on the available nationalbudget resources and donations. It hasbeen found that the former source canbe more sustainable when aligned with apoverty reduction strategy, indicatingthat a particular government has made astrong commitment to social protection.A needs assessment can show that socialprotection benefits are not out of reachfor low-income countries, even ifinternational assistance is neededtemporarily (see Krzysztof Hagemejer’sarticle in this issue).

Finally, by providing empiricalevidence on the specific determinantsof access to social services, as well ason the institutional and financialcapacities that are required and available,needs assessments serve as strategictools in the design and implementationof CCT programmes, especially in placeswhere poverty eradication is still far frombeing achieved.

Handa, S. (2001). “Raising Primary SchoolEnrolment in Developing Countries: TheRelative Importance of Supply andDemand”, Journal of DevelopmentEconomics 69, 103–128.

Lloyd, C. B. and A. K. Blanc (1996).“Children’s Schooling in Sub-SaharanAfrica: The Role of Fathers, Mothers,and Others”, Population and DevelopmentReview 22 (2), 265–298.

Pal, K.; C. Behrendt; F. Léger; M. Cichonand K. Hagemejer (2005). “Can Low IncomeCountries Afford Basic Social Protection?First Results of a Modelling Exercise”,Issues in Social Protection,Discussion Paper 13.

Ribas, R.; K. Parra and E. Silva(forthcoming, 2008). “CCT Needs Assessment:The Case of Honduras”, Country StudySeries. Brasilia, IPC.


Pensions usually have legal protectionthat is enshrined in constitutions orbinding legal documents. These legalprovisions protect social transfers frombudgetary cuts resulting from economicdownturns and political changes. But notall cash transfer programmes are subjectto such provisions—by which we mean aframework, established by a legislature,which is not easily reversible. We alsomean a framework that providesconstitutional and statutory rightswith the purpose of guaranteeingaccess to basic services.

Cash transfer programmes areproliferating, but problems may arise ifthey have a fragile legal framework ornone at all. It is important to providebeneficiaries with legal protection,especially given the long-term objectivesof human capital building. In the firstarticle of this issue of Poverty in Focus,Degol Hailu and Fabio Veras Soares notethat cash transfer programmes attractvotes. The programmes’ association withprominent politicians may compromisetheir sustainability, and thus it is of greathelp to institutionalise them. One way ofdoing this might be to strengthen thelegal framework under which theprogrammes are regulated.

Table 1 presents programmes that haveclearly defined legal frameworks. Theselaws and decrees are specificallydesigned for the programmes listed,which we consider the best way toguarantee sustainability and continuity.

It is useful to look closely at the countrycase studies. In her article for this issue ofPoverty in Focus, Tatiana Britto explainsthe process leading to the establishmentof Brazil’s cash transfer programme, BolsaFamília. In January 2004, a bill was finallyapproved by President Lula after 10 yearsof deliberations in Congress. The law

affirms the right to a basic income inorder to obtain food, education andhealth care. Although it falls short ofproviding universal rights, it givespriority to the poorest. Brazil also has aless well-known but equally importantunconditional targeted cash transferprogramme, the Benefício de PrestaçãoContinuada (Continuous Cash Benefit),which is a monthly transfer to poorpeople aged over 65 or with disabilities.This cash transfer scheme is alsoguaranteed by the constitution.

The Chilean Chile Solidário conditionalcash transfer programme is regulatedby the May 2004 Chile Solidario Law.Indexation of benefits to inflation is onethe strengths of this legal framework.

South Africa has developed an extensivesocial security system, including the ChildSupport Grant, Old Age Grant, DisabilityGrant, Grant in Aid, Care DependencyGrant and Foster Child Care Programme.These are regulated and legallyrecognised by the Social Assistance Act,and are supported by constitutionallegislation. This approach marks a newstrategy in the field of social protectionin South Africa, and makes the nationalgovernment responsible for ensuringsocial security rights.

Mozambique’s Programa de SubsídioAlimentar (Food Subsidy Programme),established by decree on 25 August 1993,is an important initiative in the fightagainst poverty and inequity. Under thisdecree, eligible individuals are entitled toreceive cash transfers.

In September 2005, the governmentof the Dominican Republic issued a decreethat created the Solidaridad programme asan important component of the country’ssocial protection network. The decree setout the programme’s vision and

by Degol Hailu, Marcelo Medeirosand Paula Nonaka,


It is important to providebeneficiaries with legalprotection, especially giventhe long-term objectivesof human capital building.

Cash transfer programmesneed comprehensive legalsupport that is carefullydesigned for each initiativeand established by statute.

Legal Protectionfor Cash Transfers:Why We Need It


does not fit into the category of schemeswith a specific protective legal framework.

In Bangladesh, the Primary EducationDevelopment Programme is based on thePrimary Education Act, but as in Mongoliathe law does not provide a specific legalframework for the programme.

Ghana’s social grants programme,Livelihood Empowerment AgainstPoverty, provides both conditional andunconditional cash transfers to its targetpopulations. There are general lawsand policies that may constitute a legalframework for the programme, suchas the 1992 constitution and the 1991Social Security Law. But a specificregulation is still lacking, althoughthis is under discussion.

In conclusion, cash transfer programmeneed comprehensive legal support that iscarefully designed for each initiative andestablished by statute. Policymakersand the designers of such programmesshould be aware that their sustainabilityis threatened if they have fragile legalframeworks or none at all.

Table 2Countries with No Specific Legal Framework for Cash Transfers

Ethiopia

Mongolia

Bangladesh

Ghana

Productive Safety NetProgramme

Child Money

Primary EducationDevelopment Programme

Livelihood EmpowermentAgainst Poverty socialgrants programme

Programme ImplementationManual (PIM), 2006Environmental and SocialManagement Plan, 2006

2005 Social Welfare Lawand 2006 amendments

Constitution, revised in 2004Primary Education Act,1990Primary Education Plan (PEDP), 2002

1992 constitutionSocial Security Law 247 of 1991The Children’s Act, 1998, (Act 560)Labour Law, 2005 (Act)

strategies, as well as its functionaland institutional structures.

India’s National Rural EmploymentGuarantee Act of 2005 supports a cashtransfer programme known as the RuralEmployment Guarantee Scheme. The actenforces the government’s provision ofsocial protection and the public’s right to it.

The six programmes outlinedabove are regulated by a legal apparatus,and thus represent a fundamental rights-based approach to social protection.Moreover, their legal status strengthenstheir sustainability and continuity,protecting them against fiscal shocksand political changes.

By contrast, the programmes listed inTable 2 are only vaguely covered byconstitutions and general laws. They arebased mainly on policy statements, aswell as on operational manuals andguidelines, and we consider them tobe less protected from politicaland economic fluctuations. Comparedto the programmes in Table 1, they arerelatively vulnerable. The programmesfunction well and their impacts may bepositive, but their scope, continuityand legitimacy would be greater ifthey had a legal framework.

In Ethiopia, the Productive SafetyNet Programme does not enjoyconstitutional recognition. It maycome under the aegis of some relatedlegislation, but it is not supported

by its own specific law. The programmeis regulated by an implementationmanual and a management plan.

Mongolia’s programme, Child Money, isbased on the 2005 Social Welfare Lawand its 2006 amendments. This law,however, covers social protection inbroad terms, and thus the programme

Table 1Countries with Specific Legal Framework for Cash Transfers

Brazil

Chile

South Africa

Mozambique

DominicanRepublic

India

Bolsa Família

Benefício dePrestação Continuada

Chile Solidario

Child Support Grant, OldAge Grant, Disability Grant,Grant in Aid, CareDependency Grant andFoster Care Programme

Programa de SubsídioAlimentar

Solidaridad

Sampoorna Grameen.Rozgar Yojana (SGRY)National Food for WorkProgramme (NFFWP)

Provisional measure 132/2003Law 10.836/2004Decree 5.209/2004Decree 6.135/2007Decree 6.157/2007Provisional measure 411/2007Decree 6.392/2008

Law 8.742 - LOAS, 07/12/1993Law 10.741, 01/10/2003Decree 6.214, 26/09/2007

Law 19949 May 2004

Social Assistance Act, Act 13, 2004

Boletim da República, I Série.Subsídio de alimentos.Decree 1 16/93, 25 August 1993.

Decree 536-2005

National Rural EmploymentGuarantee Act, 2005

30 International Poverty Centre30 International Poverty Centre

S U G G E S T E DR E A D I N G S

The International Poverty Centrehas a comprehensive researchagenda on cash transferprogrammes. It is currentlyfocused on comparative studiesin selected countries in LatinAmerica and Sub-Saharan Africa.

IPC’s research encompasses bothquantitative and qualitativemethods and ex ante andex post analyses of the impactof cash transfers on povertyand inequality.

‘Dolores del Crecimiento’: Desafíos Clave para Nuevos Programas de TransferenciasMonetarias Condicionadas en Latinoamérica. Fabio Veras Soares and Tatiana Britto.One Pager # 44. August 2008.

The Recent Impact of Government Transfers on Poverty in Honduras and Alternatives toEnhance their Effects. Rafael Guerreiro Osório. Working Paper # 47. August 2008.

New York’s Brand-new Conditional Cash Transfer Programme: What if it Succeeds?Michelle Morais de Sa e Silva. One Pager # 60. July 2008.

Los Desafíos del Programa de Transferencias Monetarias Condicionadas en El Salvador,Red Solidaria. Tatiana Britto. Country Study # 9. June 2008.

Les Transferts d’Argent Peuvent-ils tous Réduire les Inégalités?Sergei Suarez Dillon Soares and Eduardo Zepeda. One Pager # 36. June 2008.

Targeted Cash Transfer Programmes in Brazil: BPC and the Bolsa Familia.Marcelo Medeiros, Tatiana Britto and Fabio Veras Soares. Working Paper # 46. June 2008.

Los Logros y las Carencias de las Transferencias de Efectivo Condicionadas: Evaluacióndel Impacto del Programa Tekoporã del Paraguay. Fabio Veras Soares, Rafael Perez Ribasand Guilherme Issamu Hirata. Evaluation Note # 3. May 2008.

¿Los CCTs Reducen la Pobreza? Eduardo Zepeda. One Pager # 21. April 2008.

Transferências Condicionadas de Renda (TCR) Reduzem a Pobreza?Eduardo Zepeda. One Pager # 21. April 2008.

Assessing Honduras’ CCT Programme PRAF, Programa de Asignación Familiar:Expected and Unexpected Realities. Charity Moore. Country Study # 15. April 2008.

Achievements and Shortfalls of Conditional Cash Transfers: Impact Evaluation ofParaguay’s Tekoporã Programme. Fabio Veras Soares, Rafael Perez Ribas and GuilhermeIssamu Hirata. Evaluation Note # 3. March 2008.

Debatiendo los Métodos de Focalización para las Transferencias Monetarias:Índice Multidimensional vs. Proxy de Ingresos para el Programa Tekoporã de Paraguay.Rafael Perez Ribas, Guilherme Issamu Hirata and Fabio Veras Soares.Evaluation Note # 2. March 2008.

Debating Targeting Methods for Cash Transfers: A Multidimensional Index vs. anIncome Proxy for Paraguay’s Tekoporã Programme. Rafael Perez Ribas, Guilherme IssamuHirata and Fabio Veras Soares. Evaluation Note # 2. January 2008.

¿Pueden Todas las Transferencias Monetarias Reducir Desigualdades?Sergei Suarez Dillon Soares and Eduardo Zepeda. One Pager # 36. January 2008.

Todas as Transferências de Renda Diminuem a Desigualdade?Sergei Suarez Dillon Soares and Eduardo Zepeda. One Pager # 36. January 2008.

Encarando las Limitaciones en la Capacidad para Transferencias MonetariasCondicionadas en Latinoamerica: Los Casos de El Salvador y Paraguay.Fabio Veras Soares and Tatiana Britto. Working Paper # 38. January 2008.

Recent IPC Publicationson Cash Transfers

http://www.undp-povertycentre.org/pub/esp/IPCOnePager44.pdf

http://www.undp-povertycentre.org/pub/IPCWorkingPaper47.pdf

http://www.undp-povertycentre.org/pub/IPCOnePager60.pdf

http://www.undp-povertycentre.org/pub/esp/IPCCountryStudy9.pdf

http://www.undp-povertycentre.org/pub/fra/IPCOnePager36.pdf

http://www.undp-povertycentre.org/pub/IPCWorkingPaper46.pdf

http://www.undp-povertycentre.org/pub/esp/IPCEvaluationNote3.pdf


http://www.undp-povertycentre.org/pub/port/IPCOnePager21.pdf

http://www.undp-povertycentre.org/pub/IPCCountryStudy15.pdf

http://www.undp-povertycentre.org/pub/IPCEvaluationNote3.pdf

http://www.undp-povertycentre.org/pub/esp/IPCEvaluationNote2.pdf

http://www.undp-povertycentre.org/pub/IPCEvaluationNote2.pdf


http://www.undp-povertycentre.org/pub/port/IPCOnePager36.pdf

http://www.undp-povertycentre.org/pub/esp/IPCWorkingPaper38.pdf

Poverty in Focus August 2008 31Poverty in Focus August 2008 31

IPC regularly publishes anddisseminates its research usingnine publication formats

Poverty in Focus:

Presents a collection of short articleson a popular format

One Pagers:

Spark discussion on a particular topic

Policy ResearchBriefs:

Draw major policy lessons

Country Studies:

Present case studies from aresearch project

Working Papers:

Disseminate findings from anin-depth research

Evaluation Notes:

Report results from evaluationof social policies

Technical Papers:

Introduce highly technicaldiscussions

Training Modules:

Are used for capacity strengthening

ConferencePapers:

Are presented at IPC organisedevents

Further information on all IPC publications are available at:www.undp-povertycentre.org

http://www.undp-povertycentre.org/pub.do#inf

http://www.undp-povertycentre.org/pub.do#one

http://www.undp-povertycentre.org/pub.do#brief

http://www.undp-povertycentre.org/pub.do#country

http://www.undp-povertycentre.org/pub.do#wor

http://www.undp-povertycentre.org/pub.do#ev

http://www.undp-povertycentre.org/pub.do#tp

http://www.undp-povertycentre.org/pub.do#tm

http://www.undp-povertycentre.org/pub.do#cp

Au

gu

st

2008

International Poverty CentreSBS – Ed. BNDES, 10º andar70076-900 Brasilia DFBrazil

povertycentre@undp-povertycentre.orgwww.undp-povertycentre.orgTelephone +55 61 2105 5000

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