Conditional cash transfer (CCT) programs serve as poverty reduction tools. The government provides monetary support to individuals with low incomes on the condition that the individuals meet certain requirements. For example, an individual may receive a cash transfer on the condition that he or she keeps his or her child in school and ensures the child receives all necessary child immunizations. The aim of CCTs is to stop the transmission of poverty from generation to generation, which is why conditions, especially related to healthcare and education, are in place. CCTs have shown success as poverty reduction tools in many countries, especially in regions such as Latin America.

Benefits and Criticisms of Conditional Cash Transfers

A benefit of CCTs is that they allow people to use welfare to meet their specific needs. CCTs empower impoverished communities by giving them the choice, through the provision of cash, of how to use aid to best meet their individual needs. Other welfare programs are able to fulfill a specific need, but they also restrict the voice of impoverished communities to choose how to best fulfill their needs.

Another benefit is that giving individuals money is cheaper than providing people with goods. When paying for goods, the government must also pay for the secondary costs associated with the goods, such as storage and transportation. Therefore, direct cash payments are more cost-effective than programs that distribute goods.

A common concern with CCTs is that recipients will spend the money on alcohol and drugs instead of their basic needs. Researchers have conducted studies to learn more about how recipients spend CCT money and results show that most recipients spend the money on meeting their families’ needs.

4 Countries With Successful Conditional Cash Transfer Programs

1. Brazil’s Bolsa Família. Established in 2003 by Brazil’s former president, Lula da Silva, the program provides 32 reais (about $19) every month for each child in a family with a household income of fewer than 140 reais ($82) in exchange for parents ensuring that their child attends school and regular doctor’s appointments. The government will provide money for up to five children per family. Bolsa Família is the world’s largest CCT program, benefitting 11.1 million families every year. The program has decreased income inequality and poverty in Brazil. Estimates indicate that rates of extreme poverty in Brazil “would be between 33% and 50% higher” if Bolsa Família was not in place. Overall, the program is responsible for decreasing income equality in Brazil by 12%-21%.
2. Argentina’s Universal Child Allowance for Social Protection (AUH). Beginning in 2009, the program provides money to children from impoverished families. Every month, child beneficiaries receive $55. The government provides 80% of the money to the child monthly and places the remaining 20% into a savings account for the child. In exchange for the money, children must attend school and meet health objectives. The AUH reaches almost four million children, decreasing poverty and increasing childhood well-being in Argentina. In the early years of the program, child poverty decreased by 13.1 percentage points and “12.5% of households receiving the AUH in 2015 were no longer in poverty.”
3. The Philippines’ Pantawid Pamilyang Pilipino Program. Beginning in 2008, the program provides families with grants of P500 ($11) to P1,400 ($32) every month. The grant amount is dependent on the number of children in a household and the grant conditions have ties to education and child health care requirements. A couple of these conditions involve keeping children in school, attending regular pediatric check-ups and females attending check-ups in the case of pregnancy. From the start of the program to 2019, more than 5 million households benefited from Pantawid Pamilyang. The program has “increased the delivery of babies in health facilities by skilled health professionals by 20 percentage points” while raising “elementary school enrollment” among impoverished children by 5% and increasing high school enrollment rates among impoverished children by 7%.
4. Jamaica’s Program of Advancement Through Health and Education (PATH). Since 2002, the Jamaican government has committed to providing cash grants to impoverished families in exchange for children obtaining an attendance rate of 85% or higher in school and on the condition that parents take children younger than 6 years old to doctor’s appointments following a schedule that the Ministry of Health created. PATH benefits 350,000 Jamaicans, improving school attendance and increasing health care visits for children.

The Role of CCTs in Reducing Global Poverty

Conditional cash transfers have gained prominence as a strategy to help impoverished families in real-time while also working to prevent future poverty through the transmission of intergenerational poverty. While CCTs positively impact families in multiple countries, improvements to education and health services must accompany the programs so that children can receive quality education and adequate health care services. Increased participation through CCTs in tandem with improved public services can have a more significant impact on the world’s impoverished than CCTs alone. The combined power of conditional cash transfer programs and public service improvements have the potential to create lasting change globally.

– Anna Ryu
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