Use of conditional cash transfers

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The Third International Conference on Conditional Cash Transfers was recently held – all the relevant materials are now online. What are these programs? Essentially:

Governments award income support to poor families on the condition that they send their children to school regularly or bring their babies and youngsters into health centers for regular check-ups. The programs have the dual objectives of diminishing poverty directly today and reducing the transmission of poverty to future generations by helping form the human capital of today’s children.

A very hot topic that is gaining ground in many circles. While they have been quite successful in middle-income countries like Mexico (the Progresa and later expanded and renamed Oportunidades program) and Brazil (the Bolsa Familia initiative), one of the key questions will be how feasible and relevant they are in low-income countries. Other challenges are developing effective exit strategies, improving the quality of evaluations and targeting, and creating transfers which increase investment not just consumption (a current concern). For more, see the World Bank Safety Nets site.

 Cash transfers is also the topic of the most recent issue of UNDP's Poverty in Focus. I particularly liked the first essay, which touches upon the targeting vs. universalism debate. One of the reasons why people like targeting is the pressure to ensure that aid money reach the poorest – however, some argue that the administrative costs of such programs are not cost effective. The series also discusses the political economy of targeting including (1) the paradox of redistribution whereby the more domestically funded projects target the poor the less durable they become due to lack of buy-in from middle classes, and (2) the concerns that targeting schemes lend themselves to politicians as vote-buying tools that are often troubled by corruption. (via PGP Blog)

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