Cash transfers and childhood poverty in developing countries

Armando Barrientos IDPM and CPRC

The University of Manchester

armando.barrientos@manchester.ac.uk

Cash transfers and childhood poverty

• Cash transfers are ‘underused’ in developing countries as a means of achieving poverty reduction and prevention goals

• Cash transfers to poor households are effective in reducing poverty because cash can be used to address a range of deficits

• Conditional cash transfers programmes focused on children, such as PROGRESA/OPORTUNIDADES in Mexico, can successfully support household consumption and investment

Cash transfers versus in-kind subsidies

0 2 4 6 8 10 12 14 16

Sub-Saharan Africa

East Asia and the Pacific

Latin America and theCaribbean

South Asia

Middle East and NorthAfrica

Western Europe

East and Central Europe

North America

Public transfers and public expenditure on health and education as a % of GDP (1972-1997)

transfers to organisations and households

health and education

Cash transfers and childhood poverty: Mexico’s Progresa/Oportunidades

• PROGRESA [Programme for Education, Health and Nutrition] was initiated by the Government of Mexico in 1997 with the aim of breaking the cycle of poverty among rural households

• Targeted conditional cash transfer programme:– Combines demand and supply side interventions: cash transfers

to poor households with children: supporting household consumption, and child transfers tailored on school grade and sex; food supplements for infants undernourished; institutional and financial support for education and health providers.

– Conditional on children attending school, and all household members accessing primary health care

– Cash transfers paid to the mother– Decentralised administration

• By 2002 PROGRESA reached 40% of rural households in Mexico at a cost of 0.3% of GDP was extended to urban areas and renamed OPORTUNIDADES

PROGRESA health outcomes

• Evaluation based on difference-in-difference approach (change over time in treatment group minus change over time of control group)

• Health: – Low incidence of utilisation of health care by the poor in

rural Mexico: on average 0.65 visits per year – rising by between 30-50% two years after the programme started

– Infants aged 0-2 had 12% lower incidence of reported illness; and 11% for 3-5 year olds

– 19% fewer days experiencing difficulty due to illness for 18-50 year olds

– 17% fewer days incapacitated among over 50s

PROGRESA education outcomes

• Rise in secondary school enrolment rates:1997 1998 1999

Boys 65.3 +8.5 +5.7Girls 52.8 +12.6 +13.2

• Ensuring additional years of education for each child

Conditional cash transfer programmes in other developing countries

• Conditional cash transfer programme have been introduced in other countries: – Bangladesh’s Food/Cash for Education, – Brazil’s PETI and Bolsa Escola – Honduras’s Programa de Asignación Familiar – Nicaragua’s Red de Protección Social – Colombia’s Familias en Acción – Jamaica’s Programme of Advancement through Health and

Education– Mozambique’s Minimum Income for School Attendance

• And there are examples of unconditional cash transfer programmes focused on children too:– South Africa’s Child Support Grant

Some general issues relating to cash transfers in developing countries

• barriers to the increasing use of cash transfers in developing countries are mainly to do with political economy, rather than technical, factors

• cash transfers can can facilitate protection and promotion, consumption and investment

• cash transfers work best when combined with in kind subsidies and rights

• households are key to effective cash transfer programmes

Further information

– Non-contributory pensions and poverty prevention. A comparative study of Brazil and South Africa [2003], Report, Manchester: IDPM and HelpAge International. http://idpm.man.ac.uk/ncpps/

– Child Poverty and Cash Transfers [2004], Report 4, London: Childhood Poverty Research and Policy Centre and Save the Children Fund. http://www.childhoodpoverty.org/

– Social Assistance in Low Income Countries Database [2005] available from www.chronicpoverty.org