Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Wednesday, April 25, 2018 06:28:21 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Risks involved in direct cash transfers

By
18th-Apr-2017       
Comments
Share your thought
Post a comment »
Read all () »

Gavin O'Toole  :
For two decades, Latin American countries have used cash payments to encourage school attendance and strengthen public health. As international development bodies and city administrations pick up the idea, Gavin O'Toole takes stock of this unusual policy tool
It's been 20 years since Latin American countries began introducing direct welfare payments for poor households that participated in health programmes and ensured their children attended school - supporting household incomes whilst boosting education and public health. And now the policy tool is being extended into new areas, including international development: what have we learned about how to use it effectively?
Pioneered in 1997 in Brazil and Mexico, conditional cash transfers (CCTs) have become a tool of choice in poverty-reduction policies throughout the region, where about 20% of the population - at least 130 million people - now live in households receiving them.
The concept has since been taken up enthusiastically by development agencies such as DfID in the UK, and even adopted in the developed world in cities such as New York and Washington DC. Worldwide, by 2014 over 700m people were benefiting from these non-contributory 'co-responsibility' schemes.
The Latin American experience
"Conditional cash transfers are no panacea, but the overall perspective is that they were a success and that we have a lot to learn from these initiatives," says Luis Henrique Paiva, the senior Brazilian civil servant who ran the most well known cash transfer programme in Latin America, Bolsa Família, from 2012 to 2015.
"For countries that had almost nothing to offer in terms of social protection to poor people, conditional cash transfers were a good initiative because they proved to be effective in reaching them; to be relatively inexpensive; that it was possible to have a genuine impact on health and education indicators and reduce poverty and inequality; and to be replicable in other countries."
Until the 1990s, most social policy in Latin America was based upon work-related social insurance that excluded those outside formal labour markets. But in 1997, the federal district of Brasília and the municipality of Campinas in Brazil began making direct cash transfers to families living in extreme poverty, whilst Mexico introduced the nationwide Progresa programme for poor rural families. Progressive governments elsewhere launched similar schemes, and CCTs were championed by bodies such as the World Bank and through multilateral exchanges.
As the number of schemes increased, so did their size. Mexico's Progresa - renamed Oportunidades - grew to 5m beneficiary households by 2009 and Brazil's Bolsa Família extended to least 46m people. By 2006, the number of beneficiaries in Latin America had overtaken the number of poor.
However, coverage rates vary: in Bolivia, half of the population lives in households that receive CCTs, whereas in Chile and Paraguay coverage is less than 4%.
Where they work
Evidence demonstrates that CCTs have improved the lives of poor people across the board, buffering households from unemployment, illness and income shocks. And research has indicated that the poverty head count in Latin America would be on average 13% higher had CCTs not been implemented. Cash transfers have increased school enrolment and food consumption in poor households, whilst boosting the bargaining power of women.
Now a specialist in social policy at Brazil's Institute for Applied Economic Research (IPEA), a government think tank, Paiva attributes the success of CCTs to three core factors.
"The success was driven fundamentally by the design of these programmes," he says. "They were relatively well targeted - in other words, it was the first time that the federal government in Brazil had a programme expressly aimed at reaching poor people.
"Second, there was strong political support for these programmes, so the budget was relatively well protected and they were able to deliver benefits at a minimal level that could affect poverty.
"Third, both in Mexico and in Brazil these programmes were not based on consultancies; they were strictly based on national bureaucracies as part of the state's activities."
Paiva believes a key element of Brazil's success was unification of national-level CCTs under the control of the federal civil service in 2005, by President Luiz Inácio Lula da Silva (2003-11). 'Lula' gave bureaucrats considerable independence in developing the programme; and despite Brazil's size, the scheme proved remarkably cost-effective. Spending and compliance was monitored by school teachers and health workers, so the civil service didn't need to establish a new workforce to administer CCT in local communities.
The constraints on cash transfers
However, CCT schemes have of course had their limitations, and Paiva believes it is important to maintain realistic expectations.
While one key ambition behind the use of CCTs is to break the poverty cycle by developing the human capital of the next generation, the impact of CCTs on outcomes such as levels of educational achievement is mixed.
School attendance has risen, says Paiva. "Did they transform education and health in these countries? No, and this was not their purpose. They affected the demand for services, not the supply side. In other words, the government still has considerable work to do to improve the quality of education and of healthcare services. Cash transfers are not a panacea; they are not going to solve everything."
The limitations of CCTs tend to be determined by overall spending limits on social services, and an expansion in coverage has not necessary been accompanied by significant increases in budgets. While schemes have sharpened their focus on strengthening recipients' employment prospects, evidence suggests that broader structural factors limiting labour mobility trap many beneficiaries in the informal sector. There have also been concerns that CCTs may perpetuate society's organisation of care around women's unpaid work - a key cause of gender inequality.
Paiva points to a global temptation to append other public services to CCT programmes, which puts universal provision at risk. He says there is no one-size-fits-all programme, and cash transfers should respond to local conditions: it would be wrong to require recipients to ensure all their children attend school if it's difficult or expensive for them to do so. "In Brazil, we adopted and monitor conditionalities - but do conditionalities make any sense in an average African context? In my opinion, no, simply because many of their countries have severe problems in the supply side of education."
While the future of CCT programmes seems assured, bodies such as the World Bank and the Institute for the Study of Labor (IZA) in Bonn have encouraged countries to develop complementary strategies and services to maximize their impact on poverty.
"These programmes were the way Latin America found to offer social protection for the very first time to a relatively large share of the population - and they are here to stay," concludes Paiva. "But they will probably change in their design: as countries get richer, their target publics will diminish and the level of benefit will increase, and so you will end up with something similar to that of developed countries where most people are included in the economy."

(Gavin O'Toole is a freelance writer and editor in London. He has written for leading newspapers, magazines, wire services and business schools about financial markets, business and regulation around the world).

Tariff
Add Rate

News Archive

Inside The New Nation

Football »

Members of Dhaka Abahani Limited during their practice session at the Abahani Ground on Tuesday.


Sports »

Senior Operative Director (Head of Games & Sports Department) of Walton Group FM Iqbal Bin Anwar Dawn (second from left) speaking at a press conference at the Club House in Army Golf Club on Tuesday.


Entertainment »

Sonam to quit Bollywood!


Sonam Kapoor's wedding has been one of the most talked about topics of discussion in the industry. A lot of speculations are being made about Sonam-Anand's wedding. Recent reports suggested that Sonam will be shifting to London post her wedding with Anand.These speculations even gave rise to rumours that Sonam ...

Editorial »

Police must not feel free to abuse police power against police discipline


A MOTORCYCLE was stolen from in front of a high police official's residence last week. Motorbikes are the easiest target for thieves. They either stealthily take away the bikes or stop the riders at night and snatch away their bikes. Sometimes, the bikers are knifed or beaten up. Last year, ...

International »

Dinner over, Trump, Macron get down to business


AFP :After a friendly dinner at a US landmark, US President Donald Trump and his French counterpart Emmanuel Macron were to get down to business Tuesday on divisive issues like the Iran nuclear accord and international trade.They were to meet face to face for half an hour, and then again ...

Editorial »

Justice delayed justice denied


FIVE years have elapsed after the Rana Plaza collapse in Savar which is known as deadliest garment-factory accident in history, as well as the deadliest structural failure in the modern human history. At least 1136 garment workers were killed on the spot and 1169 received severe injuries when the multi-storied ...

Cricket »

Shakib, Tamim to play for ICC World XI against West Indies


Bangladeshi all-rounder Shakib Al Hasan and top order batsman Tamim Iqbal have been included in the ICC World XI to play West Indies team in a one-off T20I match at Lord's on May 31.The match is being organised to raise fund for the reconstruction of stadiums that were damaged in ...

Sports »

(Left to right)) Uttam Mundy, CEO, PGTI; Arshi Haider, Chairman of bti; Siddikur Rahman, Professional Golfer; Asif Ibrahim, President, BPGA; Johnson Poh, Professional Golfer, Honey Baisoya, Professional Golfer unveiling the bti Open 2018 Trophy on Monday.


Entertainment »

Shilpa Shetty Kundra is Inspirational Celebrity of the Year


A successful wellness guru Shilpa Shetty Kundra is one of cinema’s most loved names. Her rise has nothing short of meteoric. This actress turned entrepreneur has to her credit successful yoga DVDs, a health and fitness channel is also a top-selling selling author of two books based on her mantra ...

Entertainment »

Richa Chadha’s new song look inspired by Parveen Babi’s Jawani Janeman


Actress Richa Chadha is considered to be the front-runner in Bollywood for experimenting with her looks and character in the films she does. Right from playing an old woman Nagma Khatoon in her first commercial success hit, Gangs of Wasseypur series to her soon to release film Daasdev, Richa has ...

City »

President Abdul Hamid receiving an annual audit report from a delegation led by Auditor and Comptroller General Masud Ahmed at Bangabhaban on Monday.


International »

Child rape case heightens India`s Hindu-Muslim divide


AFP, Jammu :The internet is being cut for hours on end in Jammu as authorities try to halt protests that have grown in the Kashmir winter capital since the rape-murder of an eight year old girl opened a new front in India's Hindu-Muslim divide.With near daily protests held across the ...

Editorial »

Govt must answer what happened to the force disappearances


MEMBERS of around 80 families joined a programme under the banner of "Mayer Daak", a platform of disappearance victims' family members, from across the country on April 21st, as per report of a local daily. Speaking at the event, supported by rights activists, family members slammed the state for denying ...

Entertainment »

Alia Bhatt spies on movie goers


Raazi trailer was launched recently. Last week, in partnership with FB & PVR, Alia spied on theatre audiences watching the trailer on the theatre screen and appeared on a two-way facebook LIVE in front of them and interacted with the audience as they could both see each other. This was ...

Football »

Neymar to be at peak of powers at World Cup: Ronaldinho


Xinhua, Rio De Janeiro :Brazil legend Ronaldinho has backed compatriot Neymar to make a full recovery from foot surgery in time for the World Cup in Russia.Neymar has been sidelined since suffering a cracked fifth metatarsal in his right foot while playing for Paris Saint-Germain in late February.He underwent surgery ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news