A Planet with 150 Million Grants

Brazil, September 21, 2014 – In the past decade, over 30 countries have instituted income transfer programs similar to Bolsa Família, providing benefits to nearly 150 million people. International institutions – such as the World Bank and the United Nations (UN) – have begun funding the implementation of several of these programs and, according to experts, the results have been positive.

The current challenge – in Brazil and abroad – lies in planning for the next step: reducing beneficiary families’ dependency on that money. According to the World Bank, these initiatives have helped reduce inequality – but they are not the “panacea” to end all poverty.

From the United Nations’ perspective, this wave of programs has fundamentally contributed to reducing poverty (one of the Millennium Development Goals) – especially in Latin America.

According to a UN survey, 18 countries have launched programs equivalent to Bolsa Família in this continent alone, providing benefits to 113 million people. This is the region where the initiatives have yielded the most significant results. Nineteen percent of the population are registered individuals.

According to the survey, together these programs account for 0.4% of the region’s Gross Domestic Product (GDP). The benefits paid per child usually range from US$ 5 to US$ 35.

A study by the Economic Commission for Latin America and the Caribbean (ECLAC) has concluded that, in spite of the discourse, these programs have actually managed to “connect the poor and indigent families to the broader social protection system.”

The survey rejected the notion that money transfers cause many adults to stop looking for employment – a theory often hailed by critics who see the transfers as welfare. However, the study does point out two limitations.

First: in some countries, the money was indeed distributed, but the schools the children were enrolled in were missing the necessary conditions to receive pupils. Second: in poorer countries, the programs reached only a small share of the extremely poor households. The money transfers were not enough to lift them out of this condition.

In addition to Brazil’s program (the most celebrated experience of its kind), Chile Solidario is another Latin American program that has attracted the attention of the UN – it guarantees income to households that meet certain requirements. To be eligible for transfers, families must sign a contract in which they agree to comply with at least 70% of the 53 established criteria. Created in 2002, the initiative is seen as “an example” by the World Bank.

That same year, Colombia introduced Familias en Acción; Mexico’s Oportunidades began transferring money to families who kept their children in school.

In 2008, Guatemala launched Mi Familia Progresa; Panama followed in the same path a short time later. In Peru, the Juntos program requires that mothers not only take their children to school, but also ensure they undergo regular health checks.

Not all of these initiatives are long-lived, however. In Nicaragua, the initiative was eventually aborted following the government’s failure to provide schools and health centers for beneficiaries.

Mexico’s program ran into serious operational problems, as families in isolated locations were unable to take their children to schools and medical centers located far from their homes.

Many governments in Asia and Africa also introduced similar income transfer programs. In 2007, Indonesia launched a program to reduce poverty and child mortality. In the Philippines, the formula was extended to families with children up to 14 years of age – the same occurred in Pakistan and Cambodia in 2005. Turkey and Egypt followed suit and, in 2007, Morocco launched a plan that was soon extended to 160 thousand families.

Measures in Asian countries were inspired not by Brazil, but by the government of Bangladesh – in 1994, it began transferring money to families whose girls were in school and had not been married by the age of 16.

The World Bank believes that this wave of Bolsa Família-style programs constitutes an “innovation” in the fight against poverty. According to the Bank, when these initiatives are well managed, they yield good results.

However, the Bank also warns governments against using such initiatives as permanent solutions. “These programs are not a panacea against social exclusion; their limitations must be acknowledged and addressed,” concludes a comprehensive study conducted by the bank on these initiatives.

“Broader reforms will be needed in the social protection system to address the most fundamental exclusion-related problems observed in the majority of middle-income countries; income transfer programs may not be appropriate in many scenarios,” warns the study.

Source: Jamil Chad, from the Brazilian newspaper O Estado de S. Paulo.