Conditional cash transfers might be premature, says paper

As more aid agencies push for cash transfers rather than aid in kind in Africa, conditional schemes are becoming the preferred choice, which may not work in an under-resourced continent, says a paper from the Overseas Development Institute (ODI), a think-tank in the United Kingdom (UK).

Conditional cash transfer schemes (CCTs), a recent development in assisting needy households, are found mainly in Latin America, where poor households with children are given cash on condition that the children attend schools and health clinics.

The CCTs in Latin America have been generally successful, said Rachel Slater, a co-author with Bernd Schubert of the ODI paper, 'Social Cash Transfers in Low-Income African Countries: Conditional or Unconditional?', but there has been no rigorous analysis of the costs and benefits of conditional versus unconditional transfers, and there were several questions about implementing the system in Africa.

"On the supply side, there are questions about whether service delivery agencies - largely meaning government-administered education and health services - will be able to meet any additional demand likely to arise when beneficiary households try to meet the conditions," said Slater.

A team from the aid nongovernmental organisation (NGO), CARE international, while researching the feasibility of a CCT scheme in the municipality of Chipata, capital of Eastern Province, Zambia, found that the primary schools were turning away applicants for enrolment because they had no capacity to absorb additional children.

Besides the quantitative constraints, there were quality problems, said the authors, "especially in rural areas where teacher absenteeism is high and where children often have to walk for more than an hour to reach the nearest school. In such situations, the main bottleneck to enrolment and attendance is not the willingness of children and their carers to invest in education, but the quantitative and qualitative constraints of the education system.

Similar constraints were hampering access to health services, particularly in sparsely populated and/or remote rural areas, where distances were immense, the transport infrastructure deficient and even the most basic drugs were often in short supply.

"Attaching conditions can end up as a tax on poor people, who might have to travel great distances to get a stamp on a piece of paper to show that they a visited a clinic to qualify for the additional money," Slater pointed out. CCTs also negate the moral argument in favour of cash transfers rather than aid in kind because they gave people the right to decide how to spend their money.

Latin America

The earliest CCTs were the Bolsa Escola programme in Brazil, started in 1995, which provided US$0.45 and US$2.85 a day to households with children aged between six and 15 on condition that they attended 85 percent of classes, according to a paper, 'Social Transfers and chronic poverty: Emerging evidence and the challenge ahead' by the UK government's Department for International Development (DFID).

The Brazilian programme also provides $0.75 a day to buy food, on condition that health clinics are attended, as well as nutritional supplements in kind for underweight children between four months and two years and pregnant and breast-feeding mothers. "On average, monthly transfers add around 20-30 percent to household income," said the DFID paper.

Another well-known CCTs programme is Progresa, in Mexico, now known as Oportunidades, which covers 4.5 million families, or 20 percent of the population.

The programme selects the poorest households, mainly those with children, in the poorest communities in the country, which receive two cash
transfers every two months. Mothers get a school grant for children aged seven to 18, ranging from $0.50 a day for each child in third grade of primary school to $2.90 for boys and $3.20 for girls in secondary school, conditional on 85 percent attendance.

Social transfer programmes are beginning to provide evidence of impact on achieving some of the United Nations (UN) Millennium Development Goals (MDGs), such as those related to food security, education and health.

In Mexico, for example, 70 percent of households participating in the Progresa programme have shown improved nutritional status, the DFID paper said. "Its impact on stunted growth in children has also been impressive, with the growth rate among children aged 12-36 months increasing by one centimetre a child a year."

However, CCTs required greater administrative capacity than unconditional cash transfers and depended on other services being in place. The limited number of low-income African countries that have started setting up social cash transfer schemes all face implementation-capacity constraints.

"In Zambia and Malawi, a district with a population of 200,000 to 500,000 people has only one or two social welfare officers. They have limited administrative skills and little experience in results-oriented management, and their motivation is affected by low salaries and the lack of guidance and supervision from their headquarters," the ODI paper commented.

Slater said one of the motives given by programme designers for linking social transfers to conditions was to make them acceptable to policy-makers and taxpayers. For instance, the South African government has consistently argued against simple cash transfers to help poor households, saying it would create dependency, but linking the transfers to MDGs might make them more politically acceptable.

Should donors consider CCTs for Africa, administrative costs should be kept as low as possible, bearing in mind the budget constraints of low-income African countries. The capacity of social welfare services would have to be improved, and the organisation of transfer schemes kept as simple and undemanding as possible, with objectives and target groups clearly defined, and reliable delivery.

There has been little research into comparing the costs and benefits of existing CCTs in Latin America, and more feasibility studies should be undertaken. The ODI, along with other NGOs in Uganda, will be launching a pilot project on CCTs in order to make a comparative study of the scheme's benefits later this year.