Brazil's Cash Transfer System

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Conditional Cash

Transfers

Tackling Poverty and Inequalities in Brazil

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What are conditional cash

transfers?

• _{The state gives cash to poor people IF they respect certain}

conditions

• _Health

• _Education

• _{They comes from the convergence of two lines of thought}

• _{Providing minimum income}

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CCT in Brazil - Background

• _{First pioneered in two municipalities, then adopted nationally}

• _{Late 1990s: first nation-wide CCT programmes}

• _{2003: President Lula launched the “Zero Hunger” (Fome Zero)}

programme

• _{An umbrella programme for poverty eradication}

• _{Comprising more than 60 poverty alleviation programmes}

• _{One of the most important is Bolsa Familia}

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Bolsa Familia - Objectives

• _Objectives:

• _{Reduce poverty and inequalities}

• _{Break the intergenerational transmission of poverty}

• _{Cash transfers are conditional to the access of essential public}

services

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Targeting

• _{It is a targeted programme}

• _{Based on an ad hoc poverty line}

• _{Covers about 25% of the population}

• _{Exceptional targeting results}

• _{73% of transfers goes to the lowest quintile} • _{94% of transfers goes to the 2 lowest quintiles} • _{Covers 100% of Brazilian poor}

• _{It differentiates between “extremely poor” (less than 34US$ per}

capita) and “moderately poor” (less than 68US$ pc)

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Targeting mechanisms

• _{Double targeting mechanism}

• _{Geographic targeting}

• _{First: federal government allocates BFP quotas to municipalities}

according to poverty estimates

• Second: within municipalities, spatial maps of poverty and other index further refine the geographical targeting

• _{Household identification}

• _{Munipalities collect data on families mainly through interviews}

• i.e. self-declared income

• _{Data are consolidated at the central level in a national database} • _{Household eligibility is determined by the federal government}

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Payments

• _{Payments are credited monthly on the beneficiaries’ electronic}

benefit card

• _{Benefits of using banks for payments include}

• _Transparency

• _{Taking advantage of extensive banking system}

• _{Reduce clientelism}

• _{Linking poor to banking system}

• _{Payments are made preferentially to the woman}

• _{93% of registered beneficiaries are women}

• _{more likely to invest additional income in the education, health}

and welfare

• _{Average time to withdraw the benefit is 22 minutes, including}

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Menu of Transfers

• _{Two types of benefits}

• _{Basic benefit}

• _{Provided to all “extremely poor” families}

• _{Variable benefit}

• _{Given to all beneficiaries depending on the number of children}

• Max 3 children

• _{Amount of transfers:}

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Conditionalities

Health Education

Children All children 0-7: • Vaccine schedule

• Regular health check ups and growth monitoring

• Enrol all children 6-15 in school

• Guarantee at least 85% minimum daily

attendance each month

Women • Pre-natal check-ups

• Post-natal check-ups

• Participate in educational health and nutrition

seminars offered by local health teams

Parents should:

• Inform school of the reason for non

attendance

• Inform the local BFP coordinator if children moves school

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Conditionalities

• _{Three objectives:}

• _{Stop inter-generational transmission of poverty}

• _{“Red flags” for vulnerability}

• _{Non-compliance with conditionalities is not responded to with}

penalties, but further assistance

• Repeated non-compliances lead to suspension or block of transfers

• _{Legitimizing the programme}

• _{97% of Brazilians agree with requirements} • _{83% say it’s a good or very good programme}

• _{Only 2% of beneficiaries disagree with conditionalities}

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Monitoring of Conditionalities

• _{School attendance registered daily by teachers}

• Less than 5% of BFP beneficiaries has less than the prescribed 85%

attendance

• Information about the respect of conditionalities are gathered at

health centres

• _{Virtually all beneficiaries comply with health conditionalities}

• Not all families are monitored

• 85% of school attendance • _{59% of health conditionalities}

• _{Non-compliance leads to}

• _{Warning (and further investigation by authorities)} • _{Blockage (30 days)}

• _{Suspension (2 60-day periods)} • _{Cancellation of benefits}

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Impact

• _{Studies suggest CCTs had an important impact at reducing}

poverty and inequalities

• _{Poverty dropped by 19% between 2003 and 2005}

• _{Inequalities dropped by 21% between 1995 and 2004}

• _{Inflation control and minimum wage legislation also very}

important

• _{Recent studies claims Bolsa Familia alone is responsible for 28%}

of total poverty reduction

• _{Bolsa Familia included into the safety net people who were}

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Impact

• _{CCTs increased school attendance and lowered drop-outs}

• _{Additional income is spent of food, school items}

• _{CCTs stimulated the economy in poor areas}

• _{Women empowerment}

• _{Reduced migration, especially from the North-east}

• _{Not much migration, even during drought years}

• _{Brazil is now being consulted for advice on income transfer}

programmes by countries across Africa (Ghana, Angola,

Mozambique), the Middle East (Egypt, Turkey) and Asia

(including India). Even New York City has implemented a

version of the programme.

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Problems

• _{Clientelism affecting beneficiaries selection and monitoring}

• _{Are cash transfers creating a culture of dependency on the}

state?

• _{It will be politically impossible to cancel, and very difficult to}

phase out the scheme

• _{Resources invested in CCTs can divert investments in other}

social sectors

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