Policy Briefing: Conditional cash transfers in developing countries – realising rights?

Policy Briefing: Conditional cash transfers in developing countries – realising rights?

Kenia Parsons (University of New South Wales)

While governments of developed countries continue their new welfare policies of mobilising more people back to work, attaching stringent conditions to benefits, and focusing on human capital, as the solution to poverty and inequality, developing countries follow suit with social safety nets attaching conditions to cash transfer benefits as springboards to higher investments in education, health and job market inclusion. Advocates of conditional cash transfers (CCTs) affirm that they can assist countries in their efforts to realise the rights of marginalised groups by linking social protection to health and education. But how feasible is this?

The rise of cash transfers as a development strategy
Social protection, considered ineffective, expensive and even harmful for economic growth in the 1980s, is an important part of today’s development strategy. International development agencies and non-government organisations have been establishing social protection departments since the 2000s, culminating in 2012 with the International Labour Organisation’s Social Protection Floors Recommendation. This Recommendation acknowledges social protection as a human right and as an important tool for reducing poverty, inequality, social exclusion and social insecurity. It recognises the primary responsibility of states to put this recommendation into effect, suggesting principles of universality, social solidarity and entitlement to benefits, among others.

CCTs have become increasingly popular as a social protection instrument in the developing world over the last two decades. A World Bank Report on The State of Social Safety Nets in 2014 states that the number of countries with CCTs increased from 27 in 2008 to 52 in 2013. Out of 48 African countries 13 have CCTs, 45 conditional in-kind transfers, and there are 39 countries that have public works programme, where payments are conditional on work attendance. But what do we know about the use of CCTs as a development strategy?

Conditions attached to cash transfers?
The theory behind CCTs linked to education and health is that they would realise rights, particularly of children and mothers, by providing benefits on the condition that they attend school and health clinics. Proponents of CCTs argue for conditionalities in a “co-responsibility” welfare contractualist framework, whereby the state and the beneficiary each has their own responsibility. There are “hard” and “soft” conditionalities, depending on how they are monitored. “Soft” conditionalities are not intended to be punitive, and contrary to “hard” conditionalities, there is no penalty if people do not comply. Conditionalities, it is argued, direct the beneficiary’s behaviour towards what is the “most adequate” or the “right” choice for exiting poverty.

This is the argument in Thaler and Sunstein’s 2008 book, Nudge, a resource much-discussed and used in policy-makers’ circles. Although the “nudge” argument is not applicable in the case of “hard” conditionalities, it does have some similarities with the logic of the “soft” conditionalities. Nudge argues that a person’s decision can be influenced by the “choice architecture”. This does not involve prohibitions or impositions, but rather, people moving to “welfare promoting” options more favourable to them, so the authors say. It also has as the underlying assumption that policy makers know what the “right” choice is.

However, as Patrick Brown (2012) has pointed out, the nudging argument fails to recognise the “deep rootedness of norms” and perceptions; there is no suggestion of investigating those who are not easily “nudged”, into the causes of the odd behaviour of individuals or specific groups or attitudes. Why bother with attitudes after all, if what we are interested is behaviour? So policy makers either disregard this odd-group, or consider ways of making nudging more effective by including higher transaction costs for the not-so-favourable option. This may involve switching to “hard” conditionalities that are more rigorously monitored. However, like the argument in Nudge, the case for conditionalities has to be more clearly made.

First, there are human rights issues in place. If persons have rights to education, health and social protection as part of the international human rights framework, why should there be any conditionalities linking these set of rights at all? This is more problematic for low-income countries, where cash transfers are used primarily for food security and other basic needs. Should the fulfilment of the education conditionality be given a higher priority than social protection? If beneficiaries do not meet education conditionalities, should this have an impact on the person’s ability to meet their basic needs?

Second, empirical evaluations have shown that conditionalities do not come without a cost. The results of a randomised controlled trial experiment in Malawi (Sarah Baird, Craig McIntosh and Berk Özler, 2011) showed that those who received conditional benefits did increase their enrolment rates and attendance in schools but those who received unconditional benefits had substantially lower teenage pregnancy and marriage rates. More recently, Sarah Baird, Francisco Ferreira, Berk Özler and Michael Woolcock conducted a systematic review of 35 studies in 2013. They found that both conditional and unconditional cash transfers improved the odds of being enrolled in and attending schools, and the more strictly monitored and penalised the conditions were, the larger the effects on enrolment. However, the effects of conditionality on improving test scores were found to be “small at best”, and this is a key indicator for building future generations’ human capital.

Lastly, a distinction must be made between the theory and the practice of CCTs. Using a different methodology, I investigated the internationally-awarded Bolsa Família CCT programme in remote rural municipalities of Northeast Brazil. I selected four case studies of poor rural municipalities in two groups: remote municipalities; and municipalities close urban areas, the latter acting as a comparison group. I found that, in these particular communities, the “co-responsibilities” logic was unevenly implemented. On the one hand, families living in remote rural villages often made tremendous efforts to comply with conditionalities, spending time and money in transportation to the local town. On the other hand, governments failed to fulfil their part of the contract: services such as schools, health clinics, social assistance and transportation, continued to be of low quality and difficult of access. This is more problematic for the rural poor living in remote villages or municipalities, as they often live in severe deprivation and long-term persistent poverty.

But even in developed countries, where conditions attached to benefits (mostly employment benefits) have been in place for a longer time, the “co-responsibility” argument is open to question. Daniel Sage (2012) has highlighted the failure of the United Kingdom New Labour’s government to fulfil their part of the reciprocity agreement. This has been observed by several policy evaluations relating to low levels of job retention, and the failure to address geographical concentrations of unemployment or to engage with certain groups of the unemployed.

Conditional cash transfers: realising rights?
CCTs must be carefully considered in developing countries. This is particularly pertinent for the poorest groups living in areas with limited or no access to the services required to fulfil the conditions. Conditions are also likely to weigh heaviest on the poorest. Furthermore, conditionalities need to be situated in context, with consideration given to culture, norms, institutions and, above all, to the fairness of the conditions imposed on potential beneficiaries and to the associated expectations of government services.

Undoubtedly, providing social protection to families who previously had no social assistance is a step in the right direction. However, the debate must be shifted away from beneficiaries’ compliance and towards governments’ commitment to providing quality services and ensuring people’s access to them. Whether these benefits realise the rights of social protection, food security, health, education and others in the long term will depend on the policy context, which includes a broad array of policies that support a change in structure, norms and institutions that reinforce and reproduce poverty and inequality.

References

(1) Brown, P. (2012). A Nudge in the Right Direction? Towards a Sociological Engagement with Libertarian Paternalism. Social Policy and Society, 11 (03), 305-317.

(2) Sage, D. (2012). Fair Conditions and Fair Consequences? Exploring New Labour, Welfare Contractualism and Social Attitudes. Social Policy and Society, 11 (03), 359-373.

 

Kenia Parsons is affiliated to the Social Policy Research Centre,University of New South Wales, Australia. This article draws on her PhD thesis, which evaluated the effectiveness of the conditional cash transfer Bolsa Família in reaching out to the persistently poor living in rural remote areas of Brazil. Her thesis can be accessed here. The author would like to thank Professors Ilan Katz, Social Policy Research Centre, University of New South Wales, Australia, and Anthony Hall, The London School of Economics and Political Science, UK, for their comments.

Image Credit: Queue to collect the Bolsa Família benefit. (author’s own photo, 2010)

1 Comment responses

  1. Avatar
    May 15, 2016

    Interesting article but what about the argument by the proponents of CCTs in the global south that it promotes social investment?

    Reply

Leave a comment