What are the challenges facing conditional cash transfer (CCT) programmes in Latin America and social cash transfer (SCT) programmes in Africa? How can CCT and SCT advocates address the issue of expanding social assistance programmes in the face of government fiscal restraints? This issue of ‘Poverty in Focus’ notes that there is evidence of CCTs having had positive impacts on education, health and nutrition and no major negative impacts on labour supply. Large-scale programmes have had impressive results in reducing inequality. The future of CCTs and SCTs will depend on their institutionalisation and on convincing the public and governments that cash transfers are not handouts, but necessary social investments.
CCTs are considered innovative because of their targeting mechanisms and because beneficiaries receive cash rather than in-kind benefits. In order to increase the human capital of beneficiaries, payments are conditional on requirements such as school attendance, visits to health clinics and regular immunisations. While some cash transfer programmes exist in Sub-Saharan Africa, SCT initiatives there are more the exception than the rule.
Tensions can exist in CCTs between the goals of short-term poverty alleviation and thelong-term development of human capital accumulation. Some CCTs have a three- to five-year limit, after which beneficiaries must leave the programme. In many cases, there are neither effective exit strategies nor support programmes for families that have graduated from the programme.
- Many national policymakers are not provided with enough information about CCTs and do not understand the mechanisms though which they work.
- CCT conditionalities exclude some localities because of inadequate supply of services. To date, there have been few needs assessments to help define feasible conditionalities.
- While strong government support for CCTs can help to facilitate implementation, the resulting high visibility of CCTs could compromise programmes when governments change.
- Sub-Saharan African countries exhibit a deeply entrenched belief that SCTs and CCTs are handouts that would divert resources from investment in infrastructure, health and education.
- Extending SCT programmes to large-scale national coverage is constrained by cost concerns.
- Limited funding makes choosing among targeting options problematic. For instance, even if universal social pension schemes are to be implemented, the eligibility age would be the targeting criterion, and this is determined by the budget available rather than by developmental outcomes.
The immediate challenge is to convince finance ministers and governments generally that social cash transfers are necessary social investments. Ownership and domestic political support are critical to the success of CCTs and can only be achieved by institutionalising the programmes. Institutionalisation would also protect CCT programmes when governments change. Further:
- The integration of CCTs within broader social policies can minimise the risks involved in consolidating the dual system that characterises social protection in Latin America.
- CCTs can complement social insurance systems that cover only formal sector workers, especially if they are part of a national social protection strategy.
- Cash transfer programmes have been suggested as a way of helping families who are caring for orphans and children affected by HIV/AIDS.
- Evidence from Uganda and Malawi suggests that targeting children is the best way of reaching the poorest households and guaranteeing significant impacts on school enrolment.
- More needs assessments should be conducted to help define feasible CCT conditionalities and provide more precise cost information.
- Evaluations of well-established STC schemes would offer insights into how to expand SCT programmes, despite the current fiscal constraints faced by most Sub-Saharan African countries.
- Such evaluations could be powerful advocacy tools with which to help win government and general public support for STCs.