The recent financial and economic crisis has sparked a debate on whether conditional cash transfer (CCT) programmes make families less vulnerable to that crisis. This link between the crisis and CCTs was made because countries like Brazil, which have large CCT programmes, were enduring the impacts better than most others.Do CCTs Lessen the Impact of the Current Economic Crisis? Yes, but...

Fabio Veras Soares

English

Research Papers in Economics

International Policy Centre for Inclusive Growth (IPC - IG)
Poverty Practice, Bureau for Development Policy, UNDP
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The International Policy Centre for Inclusive Growth is jointly supported
by the Poverty Practice, Bureau for Development Policy, UNDP
and the Government of Brazil.
   September, 2009
No. 96
by Fábio Veras Soares,
International Policy Centre for Inclusive Growth
Do CCTs Lessen the Impact of the
Current Economic Crisis? Yes, but...
The recent financial and economic crisis has sparked a
debate on whether conditional cash transfer (CCT) programmes
make families less vulnerable to that crisis. This link between the
crisis and CCTs was made because countries like Brazil, which have
large CCT programmes, were enduring the impacts better than
most others.
CCTs can help families to sustain their food consumption levels.
That in turn reduces any negative impact on the nutritional intake
of children; it also keeps them in school and away from work. If the
spillover effects documented in the literature are to be believed,
the flow of income into communities can also help alleviate the
fall in overall economic activity. CCTs that can expand during a
crisis help to mitigate the effects of the crisis. They work as local-
level automatic stabilizers, similar to how unemployment benefits
do in the developed world. They can both avert the short-term
impact of the crisis and attenuate its long-term negative effects
on human development outcomes.
Nonetheless, it is one thing to say that countries with CCT-like
programmes are sheltering the more vulnerable from the worst
consequences of the crisis, and another to recommend that CCT
programmes be designed and implemented during a crisis. It is
not easy to design and implement CCTs. Several steps are involved,
political will is required, and funds must be committed. In Brazil,
the number of beneficiaries of Bolsa Família has increased, as has
the value of the benefit as an anti-crisis measure. In Mexico, a new
stipend designed to compensate for the rise in food prices has
been included into the grant components of Oportunidades. These
changes were only possible because the programmes are well
established and have been working smoothly for some time.
It can be even more challenging to implement CCTs in low-income
countries. In most such programmes in Africa, the conditionalities
have been much less strict than in some Latin American countries,
and community targeting has been widely used. It can be costly
in terms of funds and time to establish targeting and monitoring
mechanisms. Moreover, it might not be feasible to provide financing
during a crisis period, when government revenues are falling.
Authorities should be cautious about relying on donor funds to
implement these programmes, since sustainability becomes an issue.
Even assuming that it is possible to design and implement CCTs
fairly quickly, a well-crafted strategy has to be thought through
with commitment from both donors and recipient countries.
This is particularly true as regards the question of how to phase-in
and phase-out external aid, so that programmes do not lose
political support and face being discontinued.
Policies and programmes can only be effective if they are
implemented under a sustainable social protection strategy.
Such a strategy should enable better coordination among
programmes, between the central and local levels, and among
the different international players in order to avoid duplication
of effort and waste of resources.
In relatively successful cases, such as Chile Solidario and Bolsa Família,
policy integration has been facilitated by the presence of registries
of potential beneficiaries for CCTs and other social programmes.
Such databases enable the authorities to build an array of
indicators on families’ socioeconomic conditions. This makes
them powerful tools in mapping the different needs of various
communities, and they could be used to guide other policies.
They can be useful not only to line ministers whose work is closely
related to the conditionalities or complimentary programmes,
but also to providers of basic utilities such as water and electricity.
Registries enhance monitoring of the poorest families’ access
to social services and infrastructure in a more calibrated way
than household surveys. The latter, though they are nationally
representative, are often based on small samples that do
not facilitate sound analysis for local-level interventions.
This knowledge base allows rapid crisis response when programmes
may need to expand in order to cover a larger proportion of those
that fall into poverty.
Some CCTs have proven strong enough to avoid becoming isolated
elements of a minimal safety net and have developed into more
inclusive social policies (Bastagli, 2009). They have reached that
stage through trial and error that is finally paying off, though
many challenges still lie ahead.
In sum, CCTs are not panaceas to strengthen the (emergency)
resilience of families and states. But they have features that can be
used to lessen the impact of a crisis as long as they are integrated
in a broader social protection strategy whose goal is not solely
to work as a minimal and temporary safety net.
Reference:
Bastagli, Francesca (2009) “From Social Safety Net to Social Policy? The Role of Conditional
Cash Transfers in Welfare State Development in Latin America” (forthcoming). IPC-IG Working Paper.
Brasilia, International Policy Centre for Inclusive Growth.

From Social Safety Net to Social Policy? The Role of Conditional Cash Transfers

Do CCTs Lessen the Impact of the Current Economic Crisis? Yes, but...

http://www.ipc-undp.org/pub/IPCOnePager96.pdf

Do CCTs Lessen the Impact of the Current Economic Crisis? Yes, but...

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