Bolsa Familia: The Rise of Cash Transfer Programs

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SEATTLE, Washington — In the mid to late 20th century, Brazil was widely considered one of the most inequitable countries in the world with 60% of the population owning only 4% of the wealth. This was largely due to a 20-year military dictatorship that held little concern for social issues. However, an innovative conditional cash transfer program that emerged in the early 2000s has since revolutionized Brazil’s fight against poverty.

Bolsa Familia

In 2003, former President Lula launched Bolsa Familia as a crowning new anti-poverty program. Meaning “Family Allowance” in English, Bolsa Familia does just that: it provides money to families who agree to keep their children in school, get vaccinated and attend regular healthcare visits. Programs of this sort are known as conditional cash transfer programs (CCT) because they attach certain stipulations to aid.

Besides being new, Bolsa Familia was cheap. At its launch, implementation cost only 0.5% of Brazil’s national budget. This was insignificant compared to the 22% of GDP Brazil was already spending on education, health, social protection and social security.

Despite initial skepticism, this simple policy has proven incredibly effective at fighting poverty and malnutrition, boosting school enrollment, improving children’s’ health, expanding access to jobs and bolstering women’s rights. Since implementation, extreme poverty has reduced from 9.7% to 4.3% and inequality has fallen by 15%. Bolsa Familia now reaches nearly 14 million households, or about one-fourth of the population, making it one of the largest CCT programs in the world.

Drawbacks

Whatever Bolsa Familia’s successes, CCT programs are not perfect. People who do not benefit from them can easily be forgotten and even see their situations worsen. Results from a 2018 study conducted by the World Bank Group highlight these risks. The study, which surveyed households in the Philippines, found that the country’s flagship CCT program harmed nonbeneficiaries’ food security. While stunting among young children decreased by 40% in households receiving benefits, it increased by 34% in unenrolled households.

This is because cash transfer programs can drive up food prices, especially in remote communities where farmers can’t meet the newly increased demand for animal products. Egg prices, for instance, rose by as much as 25% in remote communities in the Philippines after the program’s launch, compared to an average of 5-8% elsewhere.

Bolsa Familia and COVID-19

Bolsa Familia’s infrastructure is also fallible. In the wake of the coronavirus crisis, more families are in need of expanded social programs than ever. However, nearly one million families experienced reductions in their benefits or removal from the program altogether due to mismanagement.

Additionally, the number of families admitted to the program per month has dropped by 10,000%, while another 700,000 families remain on the waitlist. Even those who receive benefits from the program only make enough to stay above the poverty line. Ideally, the program would aim to reduce inequality by aiding social mobility in the long term. At the moment, it provides little more than a means of subsisting.

International and Future Prospects

In spite of these drawbacks, conditional cash transfer programs like Bolsa Familia have become increasingly popular in recent years. Beginning in the 1990s in Brazil and Mexico, CCT programs now exist in nearly every country in Latin America, plus others like Bangladesh, Indonesia and Turkey. Altogether, there are now 60 programs worldwide.

As more countries start to implement CCTs, different programs have begun exploring ways to boost poverty reduction benefits and mitigate negative effects on nonbeneficiaries. One proposed solution is to implement programs at the community level. Another suggests pairing targeted CCTs with investment into infrastructure, transportation and supply chains. Besides these, investing in education and healthcare may strengthen the positive effects already present in the program without harming others in the community.

Important Takeaways

Brazil’s Bolsa Familia has proven to be a massive success in the fight against extreme poverty. Since its launch, the program has more than halved extreme poverty in Brazil. It has also helped promote long-term growth by breaking the cycle of poverty through improvements in education and healthcare.

As conditional cash transfer programs become more and more common, it is increasingly important to continue analyzing and critiquing them. This allows policymakers to pair CCTs with other policies to amplify their positive effects and minimize the drawbacks. Conditional cash transfer programs are already a staple of anti-poverty legislation; with additional tweaking, they can be made even better.

Elizabeth Lee
Photo: Flickr

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