Conditional Cash Transfers Tackling Poverty and Inequalities in Brazil Diego Maiorano, Liège, 29/11/2013

What are conditional cash transfers? The state gives cash to poor people IF they respect certain conditions Health Education They comes from the convergence of two lines of thought Providing minimum income Attack the root causes of poverty

CCT in Brazil - Background First pioneered in two municipalities, then adopted nationally Late 1990s: first nation-wide CCT programmes 2003: President Lula launched the “Zero Hunger” (Fome Zero) programme An umbrella programme for poverty eradication Comprising more than 60 poverty alleviation programmes One of the most important is Bolsa Familia Merging four different CCT programmes

Bolsa Familia - Objectives Objectives: Reduce poverty and inequalities Break the intergenerational transmission of poverty Cash transfers are conditional to the access of essential public services Public services: not so much a supply problem

Targeting It is a targeted programme Based on an ad hoc poverty line Covers about 25% of the population Exceptional targeting results 73% of transfers goes to the lowest quintile 94% of transfers goes to the 2 lowest quintiles Covers 100% of Brazilian poor It differentiates between “extremely poor” (less than 34US$ per capita) and “moderately poor” (less than 68US$ pc) Covers 11.1 million families i.e. 46 million people

Targeting mechanisms Double targeting mechanism Geographic targeting First: federal government allocates BFP quotas to municipalities according to poverty estimates Second: within municipalities, spatial maps of poverty and other index further refine the geographical targeting Household identification Munipalities collect data on families mainly through interviews i.e. self-declared income Data are consolidated at the central level in a national database Household eligibility is determined by the federal government The registry is updated every two years

Payments Payments are credited monthly on the beneficiaries’ electronic benefit card Benefits of using banks for payments include Transparency Taking advantage of extensive banking system Reduce clientelism Linking poor to banking system Payments are made preferentially to the woman 93% of registered beneficiaries are women more likely to invest additional income in the education, health and welfare Average time to withdraw the benefit is 22 minutes, including transportation time

Menu of Transfers Two types of benefits Basic benefit Provided to all “extremely poor” families Variable benefit Given to all beneficiaries depending on the number of children Max 3 children Amount of transfers: Average transfer is 152 R$ (about 50 euros)

Conditionalities HealthEducation ChildrenAll children 0-7: Vaccine schedule Regular health check ups and growth monitoring Enrol all children 6-15 in school Guarantee at least 85% minimum daily attendance each month Women Pre-natal check-ups Post-natal check-ups Participate in educational health and nutrition seminars offered by local health teams Parents should: Inform school of the reason for non attendance Inform the local BFP coordinator if children moves school

Conditionalities Three objectives: Stop inter-generational transmission of poverty “Red flags” for vulnerability Non-compliance with conditionalities is not responded to with penalties, but further assistance Repeated non-compliances lead to suspension or block of transfers Legitimizing the programme 97% of Brazilians agree with requirements 83% say it’s a good or very good programme Only 2% of beneficiaries disagree with conditionalities Cash transfers are conditional on all members of the family

Monitoring of Conditionalities School attendance registered daily by teachers Less than 5% of BFP beneficiaries has less than the prescribed 85% attendance Information about the respect of conditionalities are gathered at health centres Virtually all beneficiaries comply with health conditionalities Not all families are monitored 85% of school attendance 59% of health conditionalities Non-compliance leads to Warning (and further investigation by authorities) Blockage (30 days) Suspension (2 60-day periods) Cancellation of benefits

Impact Studies suggest CCTs had an important impact at reducing poverty and inequalities Poverty dropped by 19% between 2003 and 2005 Inequalities dropped by 21% between 1995 and 2004 Inflation control and minimum wage legislation also very important Recent studies claims Bolsa Familia alone is responsible for 28% of total poverty reduction Bolsa Familia included into the safety net people who were previously excluded by all forms of support

Impact CCTs increased school attendance and lowered drop-outs Additional income is spent of food, school items CCTs stimulated the economy in poor areas Women empowerment Reduced migration, especially from the North-east Not much migration, even during drought years Brazil is now being consulted for advice on income transfer programmes by countries across Africa (Ghana, Angola, Mozambique), the Middle East (Egypt, Turkey) and Asia (including India). Even New York City has implemented a version of the programme.

Problems Clientelism affecting beneficiaries selection and monitoring Are cash transfers creating a culture of dependency on the state? It will be politically impossible to cancel, and very difficult to phase out the scheme Resources invested in CCTs can divert investments in other social sectors E.g. investing on quality health and education facilities

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