Archives
October 22, 2013
News /
Posted by NCID

Sergio Daga a policy analyst from The Heritage Foundation gave a seminar on Conditional Cash Transfers (CCT); an idea originally from Alaska. CCTs are government funded social assistance programs that aim to distribute cash to the poor on condition that they participate in certain government programs like sending children to public schools or seeking treatment in public hospitals. They are the most common type of social assistance intervention in many emerging and less developed economies, especially in Latin America, and more recently in Africa and Asia. They are popular since distributing cash to the poor seems more efficient than public-sector spending. “CCTs are the new panacea for alleviating poverty… although admittedly, they have worked in some places but not in others!” said Sergio. “They are aimed at breaking the intergenerational transmission of poverty” continued Sergio. There was need to study whether such programs had resulted in improvements in the quality of life of poor families. He revealed that his presentation had been the work of two years which would eventually be included in a book with case studies from Latin American countries like Chile, Guatemala and Bolivia. “Be as it may” sighed Sergio, “evaluating the impact of CCT programs individually is difficult as programs vary widely, not only in the quality of their evaluation methods, but also in the extent of control and monitoring schemes”.

Sergio demonstrated the impact of CCT’s using two case studies Oportunidades in Mexico and Bono Juancito Pinto (BJP) in Bolivia. In Mexico, randomized evaluations of Oportunidades had revealed that school enrolment and preventive health care utilization had increased. The program had helped increase enrolment in secondary school by 6 percentage points for boys and 9 percentage points for girls.

In Bolivia however, no official evaluation document had been issued by the Bolivian government. Using micro simulation techniques however, Ernesto Yañez Aguilar found that the BJP had had a positive impact on reducing school absenteeism in primary schools, and had not only helped reduce extreme poverty rate, but had also improved income distribution in the rural sector. In conclusion Sergio said that although CCT was the latest attempt to fight poverty, public services in most of the developing countries still lacked quality. In some cases, transfers were so large that they had a negative effect on incentives to work. 

As he explained there are at least three main concerns that are likely to undercut the effectiveness of these programs:

  • Public services in most of the developing world still lack quality due to state monopoly.
  • Transfers may be so large that they can have a negative effect on incentives to work and on to be recertifed as a beneficiary.
  • Some CCT programs are designed to achieve short-term political gains than to attain long-term stated development goals.

Sergio Daga concluded: "The countries that have made significant achievements in poverty reduction in a sustainable way have done it by implementing policies that
prioritize rule of law, limited government interventions, regulatory efficiency, and open markets."