Conditional Cash Transfer Programs in Latin America

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ALBUQUERQUE, New Mexico — Latin American countries are implementing conditional cash transfer (CCT) programs as a strategy to combat poverty and promote economic stability. CCT programs provide money to those living in poverty, on the condition that the citizens fulfill specific behavioral conditions. Examples of these conditions include ensuring children’s school attendance, regular visits to healthcare facilities or maintaining up-to-date vaccinations. Although flaws in the application of these programs appear from time to time, this strategy has been widely successful in many different Latin American countries. CCT programs not only benefit families by increasing their household income but also break the cycle of intergenerational poverty.

Mexico: Oportunidades/Prospera

The Mexican government established one of the first conditional cash transfer programs in 1997. In response to the high number of Mexican children living in poverty, Oportunidades (presently known as Prospera) is a cash transfer program that has aided 5.8 million of Mexico’s most impoverished families. The concept of the program is to directly provide money to families for them to be able to send their children to schools and health centers. Education allows children to eventually participate in the labor market. This would reduce poverty in the family and contribute to Mexico’s future economic growth.

Providing conditional cash transfers to families living in poverty helps to ensure better health and education outcomes for children. It also ensures a more sustainable income for the family in general. If the child remains healthy and attends school, they are able to lift themselves out of poverty later in life. Prospera achieved just that.

Not only did the program improve school attendance significantly but the program also reduced income poverty in rural regions. Up to one-third of this reduction is due o the success of the program. Since Mexico was one the first to nationally implement a CCT program that was overwhelmingly successful, Oportunidades/Prospera became the new model for other Latin American countries to follow. The program has been replicated in 52 countries.

Nicaragua: Red de Protección Social

Red de Protección Social (RPS) is a Nicaraguan CCT program that has been widely successful. RPS is one of the programs that replicated the framework of Mexico’s Prospera program. Beginning in 2000, the Nicaraguan government established phase one of the program as a pilot project in order for the new strategy to prove its effectiveness. Like many CCT programs, the Nicaraguan government distributed cash payments to the female head of the household in exchange for fulfilling obligations related to the children’s health and education. Phase one of RPS lasted two years and reached around 10,000 households.

In just those two years, the program both met and exceeded most of the expectations set. The CCT program “increased average school enrolment by 13 percentage points for eligible children in first to fourth grades.” Additionally, the RPS program reduced child stunting by more than five percentage points.

The International Food Policy Research Institute reported that the program decreased the extreme poverty rate of beneficiaries by one-third (15%). Additionally, family purchasing power increased by 18%. For people living in extreme poverty, purchasing power increased by 40%.

Brazil: Bolsa Familia

In response to the high rates of extreme poverty in Brazil, the Brazilian government implemented the Bolsa Familia CCT program in 2003. Before the implementation of the program, for years, the most impoverished 60% of the population had only 4% of the wealth while the wealthiest 20% held 58% of this wealth. To fight these poverty rates, the innovative approach of the Bolsa Familia program entrusted low-income families with small cash transfers in exchange for maintaining their children’s school attendance and attending regular preventive healthcare visits.

This program continues to be one of the largest in the world. It specifically unified four pre-existing programs and had benefited around 11 million of Brazil’s most impoverished families by 2006. The four unified grants included primary education, food security grants and a subsidy to buy cooking gas. Once created, the main goal of Bolsa Família was to alleviate the income deficiency of low-income households and to break the cycle of intergenerational poverty.

Roughly 10 years after the implementation of the CCT program, Brazil’s extreme poverty population fell from 9.7% to 4.3% and income inequality rates decreased significantly by 15%. Educational outcomes also improved. Bolsa Familia benefited Brazil and inspired the development of CCT programs across Latin America.

The Promise of CCT Programs

Conditional cash transfer programs have been widely successful on an individual level and on a country level. Because these programs especially target the health and education of children living in poverty, children are given an opportunity to build a foundation that will help them break the cycle of poverty. While no program is without flaws, CCT programs continue to show promise in combating extreme poverty throughout the world.

Caroline M. Dunn
Photo: Flickr

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