Cooking second-generation conditional cash transfers: What’s the best recipe?

By Social Protection Team on Fri, 26 April 2013

Written by Michelle Domingo-Palacpac, Senior Social Development Officer

Nowadays, the secret to coming up with better nourishment is to check what recipes are available online, read reviews and attempt to come up with your own by mixing ingredients and techniques gathered from different sources.  

This anecdote is perhaps not new to most. Many have attempted this approach in various aspects of life. It comes handy even in our quest to come up with better development programs. As what I’ve recently learned, this is also the same story behind more successful Conditional Cash Transfers programs – or what we have commonly referred to in the social protection jargon as CCTs. Developing countries learn from the experience of others on CCTs, taking what worked best and innovating on design to increase its development impact.

Aided by my participation at the recently held South-South Learning on Conditional Cash Transfers that was co-organized by ADB and IDB, I’d attempt to capture ingredients of what could perhaps constitute a successful CCT program or second-generation CCTs. 

Building the operational foundations

Better CCTs have good beneficiary targeting, M&E and payment systems combined with a sound graduation/ exit strategy. The experiences in Latin America and Caribbean (LAC) have shown that while there is no perfect targeting, we can apply a combination of targeting approaches (i.e. geographic, categorical, proxy means test, community validation) that could minimize inclusion and exclusion errors. A strong M&E system has to be integrated in the design of the program from the very beginning since results from monitoring are sources of valuable information to improve the design and/or implementation strategy of CCTs.  Impact evaluation comes very useful in justifying program continuity during changes in political leadership, as in the case of Mexico’s Progresa/Oportunidades program. A graduation or exit strategy needs to be studied at length while the program is being designed and should converge with other poverty reduction programs of the country. 

Determining the appropriate conditionalities

As they say, no two countries are the same. CCTs aim to increase income in the short-term through direct cash transfer; and support human capital accumulation in the long-term through the conditionalities that are often linked to improving education and health outcomes. Hence, assessment of the supply side constraints is also a must to effectively determine the appropriate conditionalities that should be attached to the cash grant. The supply side readiness must be addressed adequately before the CCT program is rolled out in a specific community. In some cases though, increase in demand for social services from CCT beneficiaries have prompted an increase in investments in social infrastructure and services.

Assessing sources for financing and fiscal sustainability

We have learned that CCTs require long term financial commitment. While the recent experience from LAC show that the size of the CCT is about 0.3-0.4% of GDP, it is useful to note that before reaching this program size, these countries in LAC have started with smaller programs that were piloted and scaled up over time. Economic progress has helped countries in LAC to finance an expansion of their CCTs. The approaches to create fiscal space to expand social assistance programs that are effective such as CCTs, could be possible through more effective inter-government coordination, rationalization of existing social protection programs, and/or support from the international development partners through technical assistance and loan projects. 

Accounting for governance and institutional challenges

From the country case studies presented for Asia and the Pacific as well as the experience of LAC, administrative capacity to implement CCTs can determine the success or failure of the program. Therefore, there is a need to also make parallel investments in improving institutional capacities like in the case of Brazil’s Bolsa Familia; and increase transparency and accountability for good governance. CCT implementation is complex and requires the expertise of knowledgeable civil servants with foresight and passion to uplift the quality of life of poor people. The experience shows that commitment of all stakeholders from the line ministries to the subnationals, and local government units can ensure that the CCT program achieves its expected outcomes 

Including gender dimensions

CCTs have been proven successful in increasing women’s participation in the development process .The approach taken is that women are identified directly as the grantees. They are tapped to serve as parent leaders as in the case of the Philippines’ Pantawid Pamilya; and educated through participation in Family Development Sessions that was also now being implemented in Indonesia’s Program Keluarga Harapan. CCTs have also been instruments to keep girls in school, and reduce maternal mortalities. In the case of Pakistan, Benazir Income Support Program was able to help empower women by giving them an identity and resources to increase their contribution in the household. 

2G CCTs

Just like in any other programs, there is no “one-size-fits-all approach” in CCTs.  2G CCT recipes may vary but the five aspects cited above comprise the basic ingredients. Differences in capacities and resources exist and therefore, each country must tailor-fit its CCT program to local conditions, make investments to boost social infrastructure and services, and at best look for synergies with other social protection programs and link it to other national poverty reduction programs.