Professional Documents
Culture Documents
Xurxo Martínez
ABSTRACT
In the last ten years conditional cash transfers have proliferated as a tool
to fight poverty, addressing most of the Millennium Development Goals.
Mobile money, cross-sector collaboration, and cultural adaptation can
help to make them more viable and effective, mainly in Africa and Asia.
Conditional Cash Transfers Xurxo Martínez
Table of Contents
SUMMARY 2
MAIN ISSUES 8
IDENTIFICATION OF THE INDIVIDUALS AND GROUPS TARGETED 8
DELIVERING THE CASH 8
MONITORING AND ENGAGING 9
REFERENCES 15
TABLES 16
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
Summary
Conditional cash transfers (CCT) programs have become one of the main
strategies to alleviate poverty, promoted by both governments and global
institutions such as the World Bank. They focus on reinforcing school assistance
and health checkups for pregnant women and children. The goal is to help the
younger generation to escape from poverty traps. These programs seem to fit
perfectly as a tool to address the Millennium Development Goals: they can
address goals regarding poverty, education, empowerment of women, children
mortality, maternal health, or prevention of diseases such as HIV/AIDS, while
promoting a global partnership for development (UN, 2010).
Technology is becoming a key element in the two countries that set the standard
for these kinds of initiatives: Brazil and Mexico. In addition, a combination of
technology and cross-sector partnerships can help to spread CCTs in Asia and
Africa.
Their goals are mainly transformational, focused on social assistance and human
capital formation. They combine political and financial schemes.
In this paper we will first explain how CCTs work and their origins. Then we will
discuss how the scheme has evolved during the years and different areas of the
world. There will be a special focus in Latin America, where the countries
mentioned above serve as role models for their neighbors.
Today more than forty CCTs are spread all over the world; many have been
running for more than five years. We will use those examples to review their
main goals, and the problems they face.
After that analysis, we will try to draw the path to a better future for these
formulas. It will be the time to talk about how technology can solve problems or
make the process more efficient. We will analyze what kind of changes could be
put in place in order to better adapt the scheme to the social and economical
reality of Africa and Asia, where these kind of programs are less successful. The
lower number of initiatives can indicate two problems: lack of a successful
program that serves as a model for neighboring countries, or that the scheme
needs more customization in order to work in a society that may not have much
to do with Latin America.
Information about the different programs mentioned in this paper can be found
in a table included after the references.
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
What It Is
Conditional cash transfers (CCT) have been presented during the last decade as a magic
bullet for poverty alleviation, after their success in Latin American countries (Son, H. H.,
2008, p.1).
There are both transactional and transformational ways to use CCT. The first case
would be money given to the beneficiaries when a huge famine or a natural disaster
happens, or when the government identifies that the price of basic goods is growing
disproportionately. But most of the CCT programs have a transformational nature.
The condition, or bargain, focuses on social services that are supposed to induce major
changes in human capital investment.
The programs cannot operate where the educational or health systems are weak. This
means that poor countries with a small public sector may not be able to develop a
program like those without external help.
Some critics say that those programs tell the poor ones how to rule their family and even
use their money. There are even studies that show how in Malawi, the results obtained
with a CCT program were very similar to the ones tied to an unconditional cash
transfers (Baird, S., et al, 2010).
The whole system that needs to be put in place to check if the condition has been met by
the beneficiaries can be both complicated and expensive. In each country and culture,
the government or any other institution that promotes these tools should evaluate
which form—conditioned or unconditioned—makes more sense for the population and
the problems targeted.
But the CCT has two clear poster children: Bolsa Família in Brazil—launched in 2003 but
with roots in programs that go back to 1996—and Oportunidades/Progresa in
México,created in 1997. Both programs have helped the two most populous and
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
powerful countries in Latin America to leverage the health and education of their
poorest families. The hope is that these changes prove to be really transformational and
will help the new generation to escape poverty.
Those programs have achieved a certain success—at least improving school attendance
and health numbers—and the World Bank has stated in a report that “CCTs have
improved the lives of poor people. Transfers generally have been well targeted to poor
households, have raised consumption levels, and have reduced poverty.” (Fiszbein, A., et al,
p. 2) That is the reason behind their popularity among the Latin American and
Caribbean governments. In the period 2000-2006, at least twenty countries started
their own programs, asseen inthe data in the table at the end of the paper.
Based on these successes the World Band tried to spread the Mexican and Brazilian
formula along Africa and Asia, where India, Indonesia, and Bangladesh had already
started similar programs.It is still soon to say that those programs have actually brought
a better future for the younger generations, but surely the raw numbers are positive and
the poor populations of Mexico or Brazil seem to believe the programs are working.
One of their characteristics is that they are really focused in the families more than on
the individuals. The condition forces the family to make decisions that are supposed to
be good in the long term: take the kids to school, attend the periodical medical
consultations, instead of focusing in the short term—i.e. having the kids helping in the
field, or at home.
Oportunidades was the first major scheme, the one that most new projects have used as
a mirror. This is in part because of the huge amount of data collected since 1997
analyzing the results and the fact that the Mexican government decided to make the
information public (Fiszbein, A., et al, p. 6). That generated a big number of reports and
papers on the initiative. In the last four years, up to 50 delegations from governments,
international institutions, or social development organizations have visited the country
to see how the program works (F. Irala, Director of Social Communication at the
Oportunidades program, personal communication, November 20, 2010).
The other main success of CCT programs is Bolsa Família, a Brazilian program that
unifies previous initiatives in just one social program. They were the first ones to use
magnetic cards as a way to deliver the money to the beneficiary. Before, the recipient
had to go to the bank—some times miles away from their homes—in order to redeem
the cash. As Brazil is a Federal Republic, creating a single census has been one of the
main challenges. Until recently there were several local databases and a national one.
When the local representatives sent new information to the national one there were
many inconsistencies. Some families got denied the inclusion in the program or got
payments delayed because of that issues (C. Riccio de Carvalho, General Coordinator of
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
Bolsa Família for the Brazilian state of Acre, personal communication, November 29,
2010).
It is even possible to see examples of these programs in some of the most developed
countries, as the United Kingdom or the Opportunity NY program in New York City,
modeled after the Mexican one.
The map has been created with the software Many Eyes. An online version can be found at
http://goo.gl/B7zb3. The data comes from the general CCT spreadsheet that can be found at the end of this
paper or—in an unabridged version—at http://goo.gl/ExLYv.
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
Health
Under the umbrella of health, mainly with a focus on prevention, we can talk about
periodic checkups for young children—especially under five years of age—and pregnant
women, vaccinations, and treatments for children with HIV and other diseases that
make them vulnerable. In many of these countries there are examples of poor pre and
post-natal nutrition, which CCT programs try to prevent.
Related to health, some programs—i.e. Costa Rican Superémonos, Spanish for Lets
Improve Ourselves—focus on enforcing nutrition. In this case the families can only use
the money to acquire first necessity goods, but no products such as alcohol or tobacco.
Education
Almost all the CCT programs have conditions related to education, with many of them
focusing just on this goal. The children in the household must enroll school and attend a
percentage of classes in order for the condition to be met. The families usually get more
money when the kid starts secondary education, as it grows the risk of the parents
forcing them to leave school and start working.
Gender
One interesting outcome—many times not directly enunciated as a goal—of CCT
programs is empowering the situation of women on their societies.
First, in most of the initiatives, the person who receives the money is the mother or the
women who takes care of the child; their status within the household grows, as they
have decision over resource allocation. That will also give them power in their
communities. Formally, the reason for putting women on charge of the money is because
they care more about the health of their daughters and sons, and to avoid the risk of
males using the grants to buy tobacco and alcohol (Lomelí, E., 2008, p. 489).
Also, some of the education programs give more money to the families if the child who
attends to school is a girl, reinforcing her chances of avoiding teenage marriages and
even pregnancies. That is the specific goal of two of the CCT programs: the ones in
Malawi, and the Indian State of Haryana. In the latter, the girls only receive all the
money when they turn 18, being a condition that they are not married at that point.
Finally this point also relates to health, as girls under 15 are five times more likely to die
during the pregnancy and their children are also more likely to born with low weight or
die during their first year than those of older mothers (Gulemetova-Swan, M., 2009, p.
2).
Sociocultural biases against educating girls also play a big role. This means that other
complementary programs should be put into place in order to achieve this goal.
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
Identification
As we have already seen, the whole process of identifying and targeting the families that
will receive the money on condition is quite expensive at the first stages of the program.
One of the main reasons is that part of the rural population lacks of any kind of standard
ID. This is a broader problem that affects the whole relationship between those
individuals and their government. Some of the CCT programs—i.e. Peru and Chile— look
to also address this issue, including the condition that the members of the household
must be in possession of that kind of identification.
Main Issues
In order to start a CCT program, the promoter—usually a government—should make
sure that it is possible to identify the target population, and create a complete database;
that it makes sense to tie a condition to the disposal of cash in order to achieve the goal;
that it will be able to monitor the operations and evaluate the success of the program;
and that there is enough political support and good governance in relation to the
initiative.
One example of the importance of political commitment is Nicaragua and the program
Red de Protección Social—Spanish for Social Protection Net—. The program significantly
increased school enrollment, and reduced by 5% the need of medical treatments in the
communities affected. The international community signaled that as a success. But the
program was not understood internally, where politicians were pressed to share
economic resources with other initiatives, letting the program die (Charity, M, 2009).
But if we let aside the politic side of CCT, and focus on operational and financial issues,
the four big problems all CCT face are the following: Identification of the beneficiaries,
accessibility in poor and rural areas, delivering the cash, and engaging the recipients in
something else besides meeting a condition to get more money.
As it was said before, Mexico is the country that has provided more data about the whole
CCT process. So they are an illustrative example. During the first year of implementation
of their program—1997—, the cost of targeting represented 65% of the total cost,
followed by monitoring at 8%, and actual delivery of transfers also at 8%. By 2000,
when the main identification and targeting work was already done, the transfers
accounted for the 41% of the cost, monitoring was a 24%, and targeting just 11% (Son,
H. H., 2008, p. 5).
We have also explained how the other main example of CCT programs, Brazil, is still
finishing a new database that will provide accurate information about the beneficiaries.
We should remember that Brazil is way ahead of most of poor countries in terms of
administration infrastructure.
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
Some of the cards—i.e. Dominican Republic—only work at certain shops and for a
closed list of basic products.
In most Asian and African countries, the preferred method is to give the family some
kind of money order, cash, or to transfer the money to an account at a public bank.
Monitoring and evaluation issues force countries to come up with quite advanced
technical systems (Fiszbein, A., p. 7).
Expenses in monitoring could be lower if the CCT promoters were able to make
beneficiaries part of that process, engaging them in pursuing the goal, instead of having
to police their actions.
Now we will review the latest trends trying to overcome the previously defined issues
for CCTs, and elaborate on other advances that address similar problems and the
benefits of cross-sector collaboration. The focus will be in how technology can save
money and efforts both to governments and the beneficiaries of these programs. But we
will also talk about the importance of targeting the population group that, with the
appropriate support, would be more likely to escape the poverty traps.
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
met, and both the extra money and the feeling that they are doing something good for
their children will help them to give the young ones the option to escape from poverty.
But not all examples work like that. In the gender-based programs of India, Bangladesh,
or Malawi, the girls are the recipients of the money. In the case of the Indian province of
Haryana they get the accumulated cash once they become 18 years old, and only if they
are not married.
One of the most interesting CCT programs outside Latin America is PNPM-Generasi,
which started in Indonesia in 2007, financed by the World Bank. The novelty here is that
the recipient of the money is not a child or a family, but the whole community.
Representatives from the government go to the village and explain that they should
identify problems and seek solutions to improve twelve health and education indicators.
Once they define their main problems, also need to state what should they do to meet
the condition. They can spend freely the money they will receive, but part of it should
also help to improve the problems addressed by the condition (World Bank, 2008, p.6).
This way of making the recipients of the grant part of the decision-making process
resembles the Bank of Madura initiative exposed by C.K.Prahalad in his book The
Fortune at the Bottom of the Pyramid (Prahalad, C. K., 2005, p. 120-122). Basically
that Indian bank went to rural areas and identified a group of women. Then, that group
decided who in the village should receive a micro-loan, prioritizing those projects that
were better for the whole community or solved a higher necessity.
While defining the problem and the tools to address it, the group or the community,
becomes more aware of the necessity of a change. That way their behavior on health and
education issues will not only be driven by the promise of money. Even further, they
also need to apply part of the funding to get their goal.
Previously we have talked about the problems Brazil has faced in order to create a single
and centralized census for their social programs. Starting in 2011, a new version of the
national census for social programs will be online, and local representatives will feed it
(C. Riccio de Carvalho). Putting aside the local databases, and making it easier for the
local managers of the program to modify the data directly, will make it safer and
updated. And that is a census that includes more than 12 million households (The
Economist, 2010). Once again, not all poor countries have the administrative power,
money resources, and political will of the Brazilian government.
This is why the example of the MoTeCH initiative in Ghana is so important. This
partnership between the non-profit Access to Health, the Ghana Health System, and the
Grameen Foundation, founded by the Bill & Melinda Gates Foundation, unifies
information from the different health systems in the country—from nurses to mental
health care—in order to create a single identification record that will follow each
individual through their lives (Grameen Foundation).
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
Health is also one of the main goals of almost all the CCT programs. And health workers
may well be the only administration representatives that will visit each one of the
villages of the poor countries. If so, it makes sense for the governments to create that
kind of records, since the pregnancy and use of that data is not only for health purposes,
but also for the purpose of identification.
Other systems, such as meeting an administration member in order to get the money,
deposits in federal banks, or money orders, seem too expensive and unsafe both for the
promoter and the beneficiaries of the CCT.
Mobile Money
What happens in rural areas when even a bank office or a shop with Internet connection
can be far away of the village? What happens if an earthquake hits the country and the
government needs to put money in the hands of the poor populations?
The first example of use of mobile money to deliver cash to a group of poor people is a
set of unconditional cash transfers called Kerio Valley Cash Transfer Pilot (KVCTP) in
Kenya. It was a partnership between the Irish charity Concern Worldwide and the
Catholic Diocese of Eldoret’s. KVCTP was put in place in 2008, as that community had
lost part of their livestock and homes during the wave of violence that followed the
presidential elections in Kenya (Brewin, M., 2008), using M-PESA to deliver the
money. Now Concern plans to do the same in Niger partnering with the mobile money
platform ZAP.
And following the idea of MoTeCH, where a central and unified data system can be used
for a number of purposes, we can envision how from the moment an official
representative decides the beneficiaries has meet the condition, the system will be able
to know what kind of grant should be given, and would even send the funds to the
pertinent mobile money account.
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
With both magnetic cards and mobile money the transparency of the method—
combining a universal ID and the disbursement of money through electronic means—
would diminish the presence of corruption and save money in paperwork.
Another option in order to deliver the money could be microfinance institutions, as they
are also present in the field and operating as small-scale banks. It would even make
sense to put another condition on the use of the money. For example, that a percentage
of the grant amount should remain in the microfinance bank, investing part of the
money in a local business. That way the microfinance entity would get rewarded for
their role in the CCT scheme, the recipient of the grant would have a chance to make
some extra money, and the local economy would be strengthened. Right now the
Nigerian CCT—Care of the Poor—is using microfinance institutions as payment offices.
When deciding how to deliver the money, the promoters of the CCT should take a look at
the following criteria: the objectives of the program—emergency relief vs. yearly
payments—, the availability of the delivery options in a given context, the costs of
implementation and regular operation of each method, the amount of flexibility the
payment may require, and the risk of fraud and corruption (Barca, V., et al, 2010, p. 10).
If the beneficiaries are aware of their percentage or degree of completion in order to get
the money, they will be more likely to make the effort in order to meet the condition.
Stepping away from the technology for one moment, it is worth taking a look at the
strategy the CCT Indonesian program PNPM-Generasi is using. Making the community
part of the process of defining both the specific goals and the conditions will likely bring
engagement among the villagers as an output, and that engagement will lower the need
for enforcement schemes. Obviously, we should also note that making a community the
beneficiary of the CCT also lowers the administrative costs of collecting information. We
can even think about selecting one respected member of each community in order to
send the information to the central hub periodically.
If we agree that CCT create new opportunities, other initiatives should make sure that
the beneficiaries could really make use of those new options. There is no point in
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
But there is a whole series of small players who work to define the programs, localize
solutions for each culture and society, and solve complex problems with technology.
Partnering with foundations and private institutions can be a shortcut for logistic and
technical issues that may prevent CCT initiatives to be viable or successful. And here we
meet again the need for a strong political commitment. If governments see those
partnerships as a way of loosening control over the program or their leadership, they
might choose not to roll out CCT programs, or to do it in a limited way.
We talk about partnering and not just about buying or using one technology, because
initiatives such as M-PESA, the mobile money brand owned by Safaricom, are far more
than just a technology the government can buy. In order to be successful in a tough
environment, Safaricom solved many other problems, such as security of the
transactions, or ubiquity of their representatives. These issues affect also CCT schemes,
and can be more important than the technology itself.
So, for poor governments these partnerships are a way to acquire infrastructure, know-
how, or access to technologies that would make possible for them to rollout something
as complex as a CCT program.
For NGOs and foundations it is a way to comply with their goals, and with the added
challenge of doing so in extremely hard conditions. Something similar happens with
research centers, which through that work will be able to analyze first hand data and
learn more about what faces their next clients.
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
products and services, as those become widely available. On the other hand, the second
benefit is the popularization of their brand.
It is still too soon to demonstrate that these indicators substantially help young
members of a community in poor environments to escape poverty, or if the same
results could be obtained through unconditional cash transfers. But it certainly
seems to be a scheme that matches political goals, improves basic conditions, and
provides extra money to those poor families that show a bigger commitment to
change their actual situation.
A kind of indirect but very valuable effect of CCTs is to strength the status of
women in their families and communities. The women-specific CCTs should
continue until other indicators show that the situation of women and men is
absolutely equal.
Regarding the systems put in place to identify the recipients of the grants and
give them the money, promoters of this kind of initiative should explore the
opportunities and savings that both technology and partnership bring. Even if
that means to give part of the responsibility and control to others: from
telecommunication companies to microfinance institutions, health control
programs, or rural shops.
More than 30 countries around the world are testing CCTs. It is very important to
share the accumulated knowledge that these experiences bring, both among
themselves and with other countries that might be thinking about similar
initiatives. But the main relationship should take place among neighbor
countries, as they share culture and needs. It will always be easier for an East
African country to adapt a scheme from Kenya than one from Mexico.
The key to the future success for CCT seems to lie on the following principles:
sharing of information, better organization of data, ability to adapt ideas from
other programs and non-CCT initiatives that address related issues, and the
implication of the beneficiaries in the definition of the goals and conditions.
Technology will help the main players to find shortcuts and broaden options.
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
REFERENCES
Abdul Latif Jameel Poverty Action Lab. Retrieved from http://www.povertyactionlab.org/
Baird, S., Mcintosh, C., & Ozler, B. (2010). Cash or condition?: Evidence from a randomized cash transfer program. Washington, D.C: World
Bank.
Barca, V., Mcintosh, Hurrell, A. MacAusian, I., Visram, A., Willis, J. (2010). Paying Attention to Detail: How to transfer cash in cash transfers.
Brewin, M. (2008). Evaluation of Concern Kenya’s Kerio Valley Cash Transfer Pilot. Concern Worldwide. Retrieved from
http://www.concern.net/resources/kenya-mobile-phone-cash-transfers-report
Charity, M. (2009). Impact Is Not Enough: Image and CCT Sustainability in Nicaragua. International Policy Centre for Inclusive Growth
Dee, T. (2009). Conditional cash penalties in education: Evidence from the Learnfare experiment. Cambridge, Mass.
Fiszbein, A., Schady, N. R., & Ferreira, F. H. G. (2009). Conditional cash transfers: Reducing present and future poverty. Washington D.C: World
Bank.
Grameen Foundation. Mobile Technology for Community Health (MoTeCH). Retrieved from
http://www.grameenfoundation.applab.org/section/ghana-health-worker-project
Gulemetova-Swan, M. (January 01, 2009). Evaluating the impact of conditional cash transfer programs on adolescent decisions about
marriage and fertility: The case of Oportunidades. Dissertation Abstracts International, A: the Humanities and Social Sciences, 70,
6, 2155.
Lomelí, E. V. (January 01, 2008). Conditional cash transfers as social policy in Latin America: An assessment of their contributions and
http://www.opml.co.uk/policy_areas/poverty_and_social_protection/index.html
Prahalad, C. K. (2005). The fortune at the bottom of the pyramid. Upper Saddle River, N.J: Wharton School Pub.
Son, H. H. (2008). Conditional cash transfer programs: An effective tool for poverty alleviation?. Manila: Asian Development Bank.
The Economist (July 29th 2010) How to get children out of Jobs and into school. Retrieved from
http://www.economist.com/node/16690887
World Bank. (2008). Conditional cash transfers in Indonesia: Program Keluarga Harapan and PNPM-Generasi : baseline survey report. Jakarta:
World Bank.
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010
Conditional Cash Transfers Xurxo Martínez
TABLES
COMPARISON OF CCT PROGRAMS AROUND THE WORLD (1981-2011)
The table shows the different programs initiated since 1981, including those that have already been
discontinued or merged with others. The order of the continents is related to the number of initiatives, and
inside each continent—America, Asia, Africa, and Europe—the order is alphabetical.
COM 597 Emerging Markets in Digital Media [MCDM – UW] Fall 2010