A new one-pager from the UNDP International Poverty Centre makes an interesting case for Conditional Cash Transfer programs as a poverty-reduction measure. Comparative evaluation of Brazil's Bolsa Família program, Mexico's Oportunidades program, and Chile's Chile Solidario program shows wide differences in the effectiveness of these programs despite good targeting in all three. Using Gini coefficient as a measure of success, Bolsa Família and Oportunidades programs appear to be the most effective, reducing inequality by 2.7points, whereas Chile Solidario only resulted in a .1 point difference in Gini coefficient. The three programs also show some moderate-to-good success rates in improving health and education indicators among recipients.
The difference, it seems is in scale. Bolsa Família is a gigantic bohemoth of a program, reaching 44 million people in 2004 with an average cash transfer of US$24 per month. The program is supported by World Bank and Inter-American Development Bank loans. Oportunidades reaches 4 million families with monthly grants ranging from US$10.50 to US$66 per month, funded by a $1 billion IADB loan.
The real question is sustainability. Chile was able to accomplish major poverty-reduction goals among a very small but very disadvantaged segment of the population for the cost of one interest payment on the loans Brazil and Mexico received for their programs. Yes, the drop in Gini coefficient in Brazil and Mexico was impressive, but what happens when loan funding runs out and loan payments begin? Another concern is that the programs are essentially self-targeting. They rely on survey results and reported income to decide who should receive payments, providing an incentive to underreport income.
So you see.