For centuries, poverty has plagued every country of the world, from developed to developing nations. However, it has only been within the last few decades that ways to permanently eradicate this perennial problem have been at the forefront of development policy. Social protection, and as such, social insurance and social assistance have risen in prominence as strategies to counter poverty and vulnerability in developing countries. Of even greater significance are the conditionalities being attached to these programmes to ensure that intergenerational poverty does not persist and future generations have a chance of being productive members in society.
Antipoverty transfers, particularly conditional and unconditional cash transfers, were introduced as a means to assist in the improvement of various facets where being impoverished may have caused deficits. Beneficiaries usually include the most vulnerable groups of society who often escape the scope of conventional social policies (Bichir 2010). With the emergence of conditional cash transfer (CCT) schemes, much focus has been placed on developing the health and educational capacities of those in poverty. The traditional role of these programmes has been resource distribution to the impoverished in times of crisis (Rawlings 2005). However with time and results-based research, adjustments have been made to the fundamental principles with cash now being given to poor families and households provided that their children attend school regularly and visit health facilities for ongoing check-ups and vaccinations. Health and education are deemed primary drivers in the fight against poverty and in preventing those vulnerable from becoming impoverished. Studies have shown that individuals who are healthy and have some basic level of education have a higher propensity of escaping the poverty trap and leading normal lives (Ghatak 2014).
One of the first programmes of this type was Bolsa Familia (BF), previously Bolsa Escola, developed in Brazil. Although the name has changed, the services offered and the coverage significantly expanded, the successes of this flagship programme cannot be denied and its design has been used as a template for further programme growth in other developing countries.
This paper will expound on social assistance programmes, the motivation behind their creation and their shortcomings. The aim of the paper is to evaluate the effectiveness of these programmes in reducing poverty in the developing world. Evaluation will be done primarily through the use of development indicators on Brazilian data. The focus will be on CCTs to deduce if imposing health and school obligations on recipient households has had any significant impact in assisting their departure from poverty and preventing a relapse. BF will be used as the case study given it has been around for over a decade, data are readily available and its expansive programme scope. The paper will conclude with possible implications for policymakers in developing countries and the way forward.
Social protection is considered a part of the wider development policy framework which includes social insurance and social assistance. The aim of social protection is to safeguard workers and their families from events, whether catastrophic in nature or not, that would threaten their basic living standards. This approach favours policies that encourage investment in the capacity of the household members in order to reduce the likelihood of remaining in poverty (Barrientos 2011). Developed countries provide social protection as a source of income maintenance, while in less developed countries, social protection tends to focus on those in extreme poverty. The premise of social protection is not only to provide a stable income for those experiencing poverty, but also to provide a means to permanently escape such a situation, mostly through human capital investment.
Social insurance encompasses a series of programmes that ‘soften the blow’ against life’s events, such as maternity, retirement, and work-related injuries. This type of programme is more appropriate for those who are not destitute as it is usually financed through employee/employer contributions. Social assistance, on the other hand, is the actual financial support given to those in an impoverished state, typically subsidised via non-contributory means such as tax financing (Barrientos 2011). This form of support arose as a process to help the poorest meet basic levels of consumption. It has a two-prong aim: alleviating the poverty of today while also combatting the poverty of tomorrow by boosting the productive capacity of the future generation. In the past, the view that poverty was merely equated with a lack of income meant that policymakers provided unconditional cash transfers to poor households, as having a stable source of income would
facilitate their purchases of basic necessities. The immediate goal was to smooth the consumption of goods or services, whether acquired through the market system or public provision (Farrington and Slater 2006). However, studies have shown that poverty is multi-dimensional, ranging from a lack of income, to ill-health, poor or no educational opportunities, unsafe environments, or even social discrimination and exclusion (United Nations 1995). Consequently, policymakers realised that a wider range of support was needed to ensure that poverty reduction would be sustainable in the long-term. In the case of Latin America, income transfers alone were not deemed sufficient to wholly eliminate poverty (Barrientos 2013). This shortfall gave rise to a new type of cash transfer programme that would shrink the abyss between government service provision and poverty eradication – the concept of human development conditional income transfers (HDCITs) or CCTs. The purpose of adding a human capital dimension to the cash transfer programme was to break the cycle of persistent intergenerational poverty and prevent vulnerable families from falling into poverty.
Originating in Latin America in the late 1990s, CCTs are now a pivotal aspect of the social protection structure whereby most countries have some form of HDCITs in effect. Of mention is that although CCTs which promote school and clinic attendance have been widely used in Latin America, cash-for-work programmes are more ubiquitous in Africa (Farrington and Slater 2006). Nevertheless, the fact that governments are acknowledging the significance of incorporating these programmes into their social sectors has allowed for greater fiscal and policy credence and financial allocation to these programmes (Handa and Davis 2006). CCTs allow families, typically mothers, to receive regular financial transfers based on the conditions that some form of human capital investment is made in the children of the household (Fiszbein and Schady 2009). Mothers are perceived as having the best interest of the children at heart; hence the reason the transfers are usually channelled through them (Orazem et al. 1999). These pre-specified conditions usually come in the form of school attendance and consistent visits to medical facilities. By imposing such conditionalities, transfers are distributed to beneficiaries with the intended purposes of short-term poverty reduction but more importantly, preventing childhood poverty (Farrington and Slater 2006). Reducing the possibility of childhood poverty is vital in eradicating the poverty cycle to carry on from one generation to another. According to Barrientos and DeJong (2006), childhood poverty has long been linked to reduced levels of schooling and nutritional scarcities. The poor in Latin America tend to have much worse nutrition, health and education resulting from reduced access to government services (Sedlacek et al. 2000). In the process of addressing these deficiencies and providing a form of financial security to the poor, policymakers are building the productive capacities of the future generation. By ensuring that children are healthy and attend school 85% of the time, these HDCIT programmes are providing the conditions necessary for skill and knowledge creation. As a result, the youth become better educated and as such, more employable when exposed to the market economy. Given these new opportunities, young individuals will most likely not suffer similar lifestyle struggles as their parents did, guaranteeing a greater chance of permanently overcoming poverty.
As a result, CCTs are able to bridge the gap between social safety nets provided by local governments and the human capital deficit faced by families in poverty. The World Bank asserts that conditions based on building the human capital of children instead of only providing income to parents build CCTs’ integrity as more of an equal opportunities development instrument as compared to solely providing financial assistance to the poor (Fiszbein and Schady 2009). Additionally, tax payers and donor agencies are more likely to support social assistance programmes given that beneficiaries display socially acceptable behaviour and the drive to succeed (de Janvry and Sadoulet 2005).
Social protection programmes began as a means to assist those in extreme poverty in times of disaster but has since evolved to encompass a human development component to ensure a long-lasting effect on poverty reduction. One of the largest and oldest social assistance programmes is Brazil’s BF. Formed in 2003, BF was an amalgamation of several development-related programmes that existed before, such as Bolsa Escola and Programa de Erradicação do Trabalho Infantil, which already focused on health and school requirements in order for households to receive income transfers (Barrientos 2013).
The attainment of BF has been widely praised as it now reaches 14 million households – approximately 50 million people or 25% of the total population – with 90% of the recipients being women (World Bank dataset). Income transfers geared toward women have been proven to be one of the most efficient ways to ensure development (Bradshaw 2008). BF has been so successful that its structure is used as a best practice model for other developing countries that desire to form their own CCT programme, as evidenced by the number of programmes that have developed since 1997. (Figure 1)
Propelling BF’s success is the extent of its programme coverage. The difficulty in many developing countries is to reach a significant portion of the poor population, but according to the World Bank, 94% of the transfer funds reach the poorest 40% of the people in Brazil who mostly use it to purchase food, school supplies and clothing. Variations of means test are also used to select income receivers (Sedlacek et al. 2000). The poverty reduction results are auspicious in that the portion of the population living below the poverty line (US$1.90/day) has declined from 13.99% to 12.71% and now 4.87% in 1997, 2003 and 2013, respectively. (Figure 2)
Of greater significance is the decline of 1.63 in the poverty gap square statistic, signalling a reduction of those individuals in extreme poverty. (Table 1) This is evident in the upward transition of beneficiary families from one socioeconomic class to another (Paes-Sousa 2006). Likewise, inequality (as measured by the Gini index) also declined from 59.80% in 1997 to 52.87% in 2013 (PovcalNet Database). (Figure 3) Despite still being relatively high, this reduction shows improvement in the government’s efforts against poverty and inequality, as Brazil has always been viewed as one of the most unequal countries in the world.
With the establishment of BF, additional fiscal allocations were made in the welfare and social security, and health and transport sectors of the general government budget to provide additional financial support (Thomas et al. 2009). Effective administration and good targeting have played major roles in this success story. BF is considered to be among the world’s best targeted programmes. Also, the use of a single registry database (Cadastro Único) and social identification number to keep track of recipients have assisted in reducing duplication of benefits and monitoring the length of programme participation (Briere and Lindert 2005). These efforts have all allowed the operating cost of BF to remain low and success rate to stay high.
While the statistics are clear on poverty reduction, the overall impact on the developmental aspects of the Brazilian society is mixed. The notion behind the HDCITs is to develop the human capacity of recipient youth. In order to gauge the effectiveness of such conditionalities, specific human development indicators must be examined. Along with other Latin American countries that participate in CCT programmes, Brazil has seen a marked increase in school enrolment and attendance rates. The programme mandates an 85% school attendance rate (Fiszbein and Schady 2009). Even with these increases, literacy rates have only grown modestly from 2004 to 2012 (96.84% to 98.62%) and higher quality test scores have not been realised, resulting in a less than impressive impact on learning. (Figure 3) Brazil is still far from reaching literacy levels found in other BRIC countries. Despite being difficult to observe, school quality plays a pivotal role in influencing student success (Hanushek 1995). The schooling system in Brazil has struggled for some time, but the government is committed to provide the necessary funding to improve education standards. The government doubled investments in education from 5.3% of GDP in 2012 to 10% in 2014 with the intention to reduce the professional shortage in the economy. (Nes 2015)
The impact on health is comparably promising, whereby families who participated in BF had children who were 26% more likely to have the age appropriate height as compared to non-participatory families (Paes-Sousa and Santos 2009). Studies have shown that increased visits to medical centres have equated to beneficiaries being healthier and children becoming taller (Fiszbein and Schady 2009). This can also be attributable to the fact that Brazilian public expenditure as a percentage of GDP has risen from 2.9% in 1997 to 4.7% in 2013 (WorldBank Database). More qualified dentists and doctors have been allocated to the rural areas of Brazil, but the needs of the people continue to be overwhelming.
It is worth bearing in mind that other constraints could also make it arduous to enhance final outcomes in education and health. Even with increased public expenditure, delivery of health and educational services are not ideal in Brazil. Poor infrastructure, lack of viable medical supplies and low availability of qualified teachers remain a problematic reality. Complementary institutions are necessary and would provide further support to bolster the efficacy of BF. Stronger structures, skilled health personnel and teachers, and improved paradigm of services are all important components to ensure prolonged success in the programme. Above all, perfect altruism of parents is most vital if their offspring are to succeed and become wage earning members of society (Fiszbein and Schady 2009).
BF moves ahead to generate strong commitment within the developing world. Carrying forward the diminution of poverty will require greater economic growth with the concomitant benefits directed to disadvantaged groups via strong public policies and welfare institutions. Institutionalisation is key if BF is to fully eliminate poverty in Brazil. The assumption, that once economic progress occurs poverty will disappear, is a false sense of accomplishment. In reality, for poverty and inequality to be eradicated, government commitment and programme coordination must be ever-present. Brasil sem Miseria is a testimony of such commitment. The goal of this federal programme is to integrate and merge BF with other development agencies in Brazil to ensure that youths will be able to gain access to labour markets and other forms of support solidifying the gains already realised.
As effective as social assistance programmes have been in the developing world, arguments have been made whether or not HDCIT programmes are the most economical or viable solutions to permanently eradicating poverty and truly building human capacity. While the upsurge in school enrolment rates and general improvement in child health cannot be denied since the implementation of CCTs, Handa and Davis (2006) argue that the exclusive focus on human capital development has led to foregone occasions to enhance the overall wellbeing of the household and greater community. Some critics also argue that such programmes create a form of increased patronage without any practical exit strategy (Hall 2008). Admittedly, the improved productive capabilities of children better equip them for future labour market participation, but nothing else is done to enhance the skills of the adult members in the household. Greater emphasis needs to be placed on that fact that CCTs have the ability to empower beneficiaries to participate in political life. By being able to elect political representatives, transfer recipients can bring their inadequacies resulting from poverty to a national forum. This would generate the parliamentary support needed to continue the fight against poverty since many of those in government believe that instead of transfer programmes, public funds should be allocated to other worthwhile projects. Criticisers of these programmes assume that welfare provides an incentive to remain unemployed and to choose leisure. The cost of subsidizing these programmes and ensuring the fulfilment of conditionalities are too high for the public purse (Bichir 2010). In this light, investment in the public sector is viewed as having higher potential returns than social assistance programmes (Fiszbein and Schady 2009). Other arguments include the fact that those in most need of the CCTs may not accept financial assistance because certain living conditions make the conditionalities impossible to satisfy. All the efforts placed on targeting poor and extremely poor households become futile if possible beneficiaries are dissuaded from the programme because the requirements are too stringent. Policy makers need to consider the context in which the households operate so as to maximize the impact of the funds and guarantee access to quality health care and educational services are equally distributed among transfer recipients.
Despite their shortcomings, HDCIT programmes in Latin America continue to be the most effective tool in the poverty reduction arsenal. While it is believed that income transfers will eliminate income poverty, redistributing consumption alone will not likely tackle poverty and vulnerability. Alternatively, social assistance will reduce and prevent it altogether and ought to be a multidimensional approach with effective and adaptable institutions as key components (Barrientos 2013). This all-encompassing approach toward assisting those in need will ensure that citizens are able to fully participate in society and provide the political support needed for institutional growth. Development of sound institutions rooted in welfare principles is necessary if antipoverty strategy is to make any advancement in the future (Barrientos 2013).
While great strides have been made combatting poverty in developing countries, there needs to be more research geared toward the effectiveness of HDCITs as it pertains to the concentration on only education and health. Other development areas can be explored that may have a more sizeable impact in reducing the hardship of future generations. As BF demonstrates, transfer programmes can start off small and disorganised but given technical assistance from multilateral agencies, local government support, and timely legislative reforms, the impact can be more far-reaching than ever initially envisaged. BF continues to be one of the most successful antipoverty programmes to-date. The World Bank is hopeful that with the successes of BF and other similar transfer programmes, the goal of eradicating extreme poverty by 2030 remains very much a possibility.
The main task of this paper was to demonstrate how effective HDCITs are in developing nations using BF as the sample programme. Despite the programme being in existence for over a decade, the overall results continue to be preliminary as new elements are constantly being added for improvement. Even though the findings are updated as new information comes along, the outcomes continue to be optimistic in signalling a reduction in global poverty. In order for HDCITs to have an even greater effect, they need to be accompanied by sustainable employment opportunities to ensure long-term poverty departure (Barrientos and DeJong 2006). Moreover, integration of the poor into society by way of improving their life prospects is the only way to bring about social justice and inclusion for the least advantaged. Nelson Mandela put it best when he said that overcoming poverty is not a gesture of charity; it is an act of justice. Those in the world, who can make a difference, need to do a better job at bringing about social justice for those who are unable to.
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