91823 the world bank Conditional Cash Transfers for Poor Families An efficient tool for combating poverty and improving human capital IBRD Results Synopsis For more than a decade, IBRD has helped countries in Latin America and the Caribbean pioneer condi- tional cash transfers as a proven approach to helping people out of poverty. By linking cash payments to keeping children in school or ensuring that families get proper healthcare, these programs are ben- efitting 21 million families—or 93 million people—each year across the region. Challenge Results Poverty and inequality are critical issues in growing econo- Countries in Latin America and the Caribbean region pi- mies and tend to pass from generation to generation in the oneered CCT programs and to date around 17 countries same families. The poor and vulnerable are exposed to a in the region have adopted them. CCTs supported by the wide range of risks and shocks that affect their current well- IBRD in the last decade benefit about 21 million house- being and their longer-term prospects for rising out of pov- holds annually in Latin America and the Caribbean, or al- erty. To address these challenges, all countries need social most 93 million individuals. The largest CCTs are in Brazil safety nets both to protect the vulnerable from falling into and Mexico serving 11 million and 5.2 million households, poverty during crises and to help them transition out of pov- respectively. Colombia’s program, Familias en Acción, reach- erty in the absence of larger crises. Safety nets are defined as es about 20 percent of all households and Jamaica’s Program non-contributory transfer programs targeted to the poor of Advancement through Health and Education (PATH) and those vulnerable to shocks. Conditional Cash Transfer benefits about 12 percent of the population. (CCT) programs, originally designed in Latin America, are safety nets that provide cash to poor families on condition These programs have been evaluated rigorously on several that they make verifiable investments in the current and dimensions and have demonstrated a range of positive im- future well-being of their children, such as regular school pacts: families eat more nutritional and diversified diets, attendance or use of basic preventative nutrition and health children go to school more regularly, and families in general services. CCT programs are among the most common and have better health. successful social safety net programs implemented in Latin America and the Caribbean. Latin American and Caribbean CCTs have had positive effects on consumption and have governments are adopting CCTs as a new social protection been shown to reduce poverty rates among participants in tool for combating poverty and preventing its transmission Mexico, Colombia, Jamaica, and Brazil. An impact evalua- across generations. By addressing demand-side barriers such tion of Chile’s Solidario program in 2006 found that rural as lack of information, these beneficiary-centered programs beneficiaries experienced an 18 percent reduction in pov- can improve the efficiency of basic services. erty and 35 percent drop in extreme poverty. Even when March 2010 2 Conditional Cash Transfers for Poor Families CCTs do not pull households out of poverty entirely, they and Mexico. Some programs have also led to increased in- can improve conditions significantly for beneficiary fami- vestment. For example, an average of 12 percent of transfers lies. For example, there is evidence of CCTs contributing to from Mexico’s Oportunidades program was invested, lead- increased per capita consumption (by 7 percent in Brazil, 8 ing to substantial positive impacts on investment in produc- percent in Mexico and 10 percent in Colombia). Beneficia- tive activities such as microenterprise and agriculture. ry families also consumed more food of better nutritional quality (for example, Ecuador, Nicaragua, Mexico, Colom- Impacts on nutrition, child development, and schooling bia), contributing to better health and nutrition outcomes. will translate into future impacts on poverty. For example, World Bank studies in Jamaica estimate that the CCT pro- CCTs have led to significant increases in the use of health gram effect will result in a 7 percent increase in future earn- services. Increased vaccination coverage was found in some ings for the children who benefit from it. countries that had low initial vaccination rates (for example, Nicaragua, Turkey, and Honduras), but not in countries (such as Mexico) where these rates were already quite high. Approach Increases in visits to health centers have been substantial with a 38 percent increase in health care visits for children The International Bank for Reconstruction and Develop- 0–6 years old in Jamaica and a 33 percent increase in growth ment (IBRD) has been involved with the conditional cash monitoring of children 0–2 years old in Colombia. Child transfer experience since the first programs began in the late height improved as a result of CCTs in Mexico, Colombia, 1990s, either through technical support or funding. IBRD and Nicaragua. There is also some evidence of impacts on engages in policy dialogue, studies, and investment lend- child development (memory, socio-emotional develop- ing, and has supported the exchange of information and ment, and motor and language skills) for preschool aged CCT experiences among numerous developing countries. children in Nicaragua and Ecuador. IBRD has helped clients design and strengthen monitor- ing and evaluation methodologies, as well as management In Latin America and the Caribbean, CCT impacts on information systems, allowing for better tracking of pro- school enrollment rates range from 1 to 10 percentage gram activities and identification of potential process effi- points, with larger effects in the higher grades. Thirty-eight ciencies. IBRD has produced multiple studies and reports percent of the children whose families have benefited from on CCTs and invests in training and knowledge exchange the Oportunidades program in Mexico and have gone on to to support program design and implementation. In recent higher education. CCTs have also contributed to substan- years, a community of practice on CCT programs in the tial reductions in child labor in Brazil, Colombia, Ecuador, Latin America and Caribbean region has been established. This community, comprising IBRD staff and the managers of several CCT programs in the region, meets virtually on a regular basis to share experiences and discuss operational concerns. Summary Time Line In the nearly ten years that the IBRD has supported CCT programs, there has been a great deal of diversity and evolu- tion in CCT design and implementation. After over a de- cade of experience, not only has the CCT model expanded quickly across national boundaries, but CCT program ap- proaches have also been evolving by seeking to: IBRD RESULTS 3 ÔÔ Fine-tuned operations. CCT programs have contribut- ed to important advances in the design, administration, and governance of social  policy. These include novel approaches to targeting the poor, addressing gender is- sues, transferring funds, fostering social accountability, building error and fraud control systems, and strength- ening governance. Rigorous monitoring and evaluation systems allow programs to adjust operation for greater impact, effectiveness and accountability. ÔÔ Take advantage of new technologies. CCT programs have been able to capture the opportunities afforded by new technologies, such as using bank cards for pay- ments and cell phones for payments and educational messages to recipients. ÔÔ Build linkages to other social programs. Chile’s Soli- dario program seeks to integrate cash transfers with a broad array of existing social services. Participants sign “a family contract” to improve their living conditions. The contract establishes an agreement between the IBRD Contribution government, which takes responsibility for supplying them with a range of support services and resources, During fiscal years 2005–2009, the IBRD helped develop and the family, which agrees to work to overcome deepen and expand the CCT model, approving 16 projects the most precarious aspects of their lives in the areas in 10 countries, mainly in Latin America and the Carib- of legal documentation, health, education, family dy- bean with more recent projects branching out to East Asia namics, housing conditions, work and income. The and Eastern Europe. IBRD approved over US$1.5 billion program has increased the take-up of public transfers for Mexico’s Oportunidades program alone—40 per cent of and the utilization of social services by the poor. total IBRD safety net lending. In fiscal year 2009, several of ÔÔ Incorporate marginalized citizens. Most CCT pro- the region’s CCT programs were expanded to protect the grams require that beneficiaries present valid identifi- most vulnerable from the impact of the global crisis: the cation documents before receiving the grant. Several IBRD provided nearly US $2.5 billion to help LAC coun- programs, for instance in Colombia, Panama, and the tries finance the response. Dominican Republic, have helped to get identity docu- ments for marginalized groups, making it possible not In several cases, a CCT program was supported either by only for them to enroll in the CCT program, but giv- successive investment loans or through a combination of ing them the first step toward access to other programs, funding, such as investment project to establish the pro- voting rights, and legal protections. gram and then additional funding through a budget sup- ÔÔ Bring beneficiaries into the financial system and pro- port operation. mote savings as a medium-term strategy to help CCT households out of poverty. For example, in Mexico’s Oportunidades, in addition to the cash payment, Partners some of the transfer can be held in a beneficiary sav- ings account. An estimated 20 percent of beneficiary IBRD has work with partners such as the Secretary of So- households have savings accounts connected with the cial Development (Mexico), the Minister of Social Protec- program. Linkages to microfinance are also being ex- tion (Colombia), the Ministry of Social Development and plored in some CCTs. Eradication of Hunger (Brazil), the Presidential Council 4 Conditional Cash Transfers for Poor Families of Ministers (Peru) and the National Council of Woman ently, to future challenges of integration with other programs (Argentina), among others, providing lending and technical and to helping clients graduate out of poverty. To improve assistance to support CCT programs. the design, implementation, expansion, and evolution of ef- fective CCT programs, further development of “best prac- tice” knowledge and useful tools for capacity-building is Good Practices Developed needed. Lessons learned in IBRD countries are providing guidance for the expansion of CCTs to IDA countries. CCTs started in Latin America and the Caribbean and now they are implemented in around 30 countries in all regions IBRD will continue lending and providing technical assis- of the world. Many countries (including Indonesia, Philip- tance to support CCT programs and innovations to ensure pines, and USA) have learned from the successful first gen- these programs best meet country needs. eration CCT programs, such as those in Mexico, Brazil, and Colombia, and have built programs based on these expe- riences. International study tours have been an important tool for countries to see CCTs in action. learn more –– www.worldbank.org/safetynets Next Steps –– http://web.worldbank.org/WBSITE/EXTER- NAL/TOPICS/EXTSOCIALPROTECTION/ CCTs play an important role in addressing chronic poverty EXTSAFETYNETSANDTRANSFERS/0,,con and delivering better lives and greater opportunities to the tentMDK:20615138~isCURL:Y~menuPK:15 poor. CCTs are moving from the first generation operational 51727~pagePK:148956~piPK:216618~theSite issues of ensuring that money reaches beneficiaries transpar- PK:282761,00.html