Cash transfers and childhood poverty in developing countries

1. Cash transfers and childhood poverty in developing countries Armando Barrientos IDPM and CPRC The University of Manchester armando.barrientos@manchester.ac.uk

2. 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

3. Cash transfers versus in-kind subsidies

5. 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

6. 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

7. PROGRESA education outcomes • Rise in secondary school enrolment rates: 1997 1998 1999 Boys 65.3 +8.5 +5.7 Girls 52.8 +12.6 +13.2 • Ensuring additional years of education for each child

8. 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

9. 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

10. 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