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Condidtional Cash Transfers in Latin America– achievement

and challengesFabio Veras Soares – IPC-IG

Workshop on Conditional Cash Transfers in the Arab Region  Beirut 19-20th July 2016

CTs and CCTs as social protection system components

Non-contributory CTs and CCTs should be understood as part of a social protection system

They are meant to cover specific sectors of the population, in particular, the poor and the vulnerable. Thus they can be seen as part of the social assistance component of social protection as well as a key tool to fight poverty and vulnerability and to support social inclusion.

Their focus is on the monetary component to smooth (food) consumption, however, by assuring that basic needs are met, they act as a springboard to have wider impacts.

These wider impacts have been greatly facilitated by recent innovations experienced in the Global South – specially in LAC, but also in countries in Africa, South America and MENA region.

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CTs and CCTs as social protection system components

Latin American countries are well known for their high level of inequalities.

Recent reforms of the social protection system have tried to curb poverty as well as to address inequities of the social protection system and to facilitate access to social services.

Arab countries have much lower inequality but they are facing challenges with the current design of their social protection programmes.

Recent reforms (or talk of) suggest that (some) countries in the arab region have been exposed to the LAC experience

It is important to understand the different contexts and how the LAC experience could be informative for the on-going reports in the arab region.

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CTs and CCTs as social protection system components

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CTs and CCTs as social protection system components

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CTs and CCTs as social protection system components

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CCTs reach 133 million people in LAC

7SourceSimone Cecchini, based on the ECLAC database of conditional cash transfer programmes

Coverage and Investment has increased over time

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Source: ECLAC (2015) Inclusive Social Development.

CCT coverage, 2000-2013 Investment in CCT, 2000-2013

Proportion of CCT beneficiaries and (extreme) poverty rates

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CCT beneficiaries is greater than the number of extremely poor persons

CCTs

CCTs components:

cash Targeting conditonalities

Implemented with a view to reach the double objective of poverty alleviation and stop intergenerational transmission of poverty

The fact that we have a double objective sometimes generate tension and contradictions no how programme evolves and how the different components are brought together in a coherent and coordinated manner.

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CCTs in LAC: a typology

• Human capital accumulationStrong role of conditionalities, no national coverage, not very regular verification of

eligibility, benefit structure clearly related to age and school grade, no explict concern about current generation – only as parents.

• Poverty alleviation/eradicationStrong role of the transfers, national coverage, regular verification of eligibility,

benefit structure incorporates unconditional elements, soft or nudge conditionalities, concern about income generation for current generation.

• Eradication of extreme poverty and case managementFocus on extreme/chronic poverty, fighting social exclusion, access to social

services, focus on linking with complementary programmes for all family member and not only children, case management – regular visits by social workers

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Poverty-related CTs and CCTs

Cash – immediate poverty alleviation, but concerns over…

DependencyMisuseInflation

Raising issues related to:

Calibration of the value of the benefit; Time in the programme;Graduation strategies

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Targeting

Targeting – geographical, categorical and (proxy) means-testing

How to deal with: exclusion and inclusion errors; verification challenges, recertification process, implementation costs. stigma

Potential impact on informality and/or labour market participation and possible response:

- Universalism- Integration with social security (subsidized contributory schemes)

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Conditionlity

Conditionality

Rationale: existence of market failures would prevent families to make optimal investment in human capital (e.g lack of information about returns to education; differences in intertemporal discount rates); differences between private and social return rates due to externalities; political support from the better-off.

Problems: conflict with rights-based approaches; income effect would suffice; evidence shows that it is not necessary to enforce conditionalities to lead to behavioural change, stigma-prone.

How to define them (issues to look at)… Nature: punitive or promotive (soft conditionalities); Implementation osts: nudge and labelling Potentially exclusionary – it hits the most vulnerable among the poor; Gender empowering or disempowering.Temptation to over-use

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CCTs in Latin America: impacts

• Improved food consumption (quality) and food security of beneficiary households; but nutrition puzzle.

• Increase in the share of expenditure in child-related goods (e.g. child clothing)

• Increase in school attendance and fall in drop-out rates, specially for pupils in secondary education

• Fall in poverty (poverty gap) and inequality – particularly where the programme covers large segments of the population and transfer is not very low

• No evidence of sizable negative impacts on labour market participation, some positive in rural areas… possibly due to…..some evidence of productive impacts: part of the transfer is invested in livestock and small business– Mexico and Paraguay.

• Concerns about impacts on informality (Uruguay, Argentina and Brazil)… have they gone too far?

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CT and CCTs challenges

How to integrate with other interventions – food security, employment programmes, OVC support, access to health and education – without missing their core objectives.

How to harmonize with existing social transfers – improving coherence across them (merging, replacing).

Attention to outcomes of the mixed models that combine Social Cash Transfers and productive inclusion graduation projects – sustainability and expectations.

Use of the registries for the consolidation of MIS as well as a planning tool to improve social policies as a whole.

National budgets and scale-up.

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Future of CCT and CTs

Permanent programmes that are part of a broader social protection system:

I. Programmes that have a basic income component may turn into a targeted basic income. Challenge: how to treat exclusion errors (transient poverty) and how to fill-in the (extreme poverty) gap.

II.Programmes that focus on children and may turn into targeted or universal child allowances. In some cases they may be merged with the family/child allowanced from the contributory sector

III.Family support/case management components – in most countries there is lack of resources, personnel and protocol on how to deal with different family vulnerabilities. How to ensure that a social assistance component is built – scarce resources and priority..

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Many Thanks/Shokran

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