Poverty passed down despite conditional cash transfer

13 February 2013

Conditional cash transfer has become by far the most popular method of reducing poverty in Latin America. But how effective is it? Does it give children from vulnerable families a better quality of life than their parents have? Johan Sandberg, a sociologist at Lund University and former economist at the World Bank and the United Nations, says that poverty will continue to be passed on from generation to generation unless the structure of society is reformed.

Conditional Cash Transfer (CCT) made its entry onto the aid stage in the late 1990s, when Johan Sandberg was working as an economist for the UN.

“I thought, ‘finally, a programme that really reaches those most in need’”, he recalls.
In the past, Latin America had attempted to adopt the European welfare model in which social policy is closely linked to the labour market. What was new about CCT was that it targeted the poorest, irrespective of whether they worked in the formal or informal sector. The conditions that the recipient had to fulfil were to send their children to school and follow government health programmes.

“The conditional benefit programmes claim not just to relieve poverty temporarily but to eradicate poverty through investments in education and health”, says Johan Sandberg.

As a doctoral student in sociology, he is now evaluating the use of the programmes in the short and the long term. He has so far carried out field work in Guatemala and Uruguay – one of the least developed and one of the most developed countries in Latin America respectively. His study on Uruguay has recently been published in the highly ranked journal Development and Change.

By interviewing mothers from poor districts in Montevideo and analysing household data, he arrived at the following conclusions: the programme is an indispensable source of income for many families. It enables the families to send their children to school, with all the incidental costs this entails. However, the long-term goal of breaking the pattern of social and economic exclusion has not been reached. Structural inequality and segregation in housing, schools and the labour market are not altered by welfare benefits, asserts Johan Sandberg.

“It is only in theory that financial support in childhood in combination with completed schooling leads people out of poverty”, he says. “The number of years spent in school unfortunately has nothing to do with what one actually learns, and almost half of pupils in Latin America leave before completing secondary school. The quality of education is much worse in poor areas than in rich areas. Furthermore, even before starting school the children are strongly influenced by growing up in an environment of criminality, overcrowding, low levels of education, malnutrition and high unemployment.”

In Johan Sandberg’s view, more far-reaching reforms are needed in order to eradicate poverty and exclusion in the long term, for example city planning that breaks the cycle of housing segregation, childcare with support for young children before they start school, improved education quality regardless of which school children attend, and labour market policy measures to reduce the marginalisation of those with a low level of education.

“Countries in Latin America have notoriously low budgets for fighting poverty, and even lower budgets for reducing social and economic inequalities”, he says. “It is therefore dangerous that the CCT programmes to claim to eradicate poverty in the long term. It diverts focus from the structural reforms that are required to combat chronic poverty and exclusion.”

The results of the field work in Guatemala produced a similar picture to the work in Uruguay. The difference was that the benefit programme in Guatemala had become a populist instrument linked to individual politicians who wanted to secure their power. Now Johan Sandberg is going to conduct studies in Brazil, Argentina, Mexico, Chile and Colombia in order to see whether his conclusions from Uruguay and Guatemala also apply there.

Text: Ulrika Oredsson

About CCT – Conditional Cash Transfer
Conditional cash transfer (CCT) is currently given to 120 million people in Latin America. Sixty per cent of all those living below the poverty line currently receive this type of benefit. It was launched in Brazil in 1995 and in Mexico in 1997. Since then, it has spread to most countries in Latin America, Asia and Africa. Since these programmes are one of three pillars in the World Bank’s Social Protection and Labour Strategy for 2012–2022, they are likely to spread further in developing countries. Almost all the programmes receive funding from the World Bank, the Inter-American Development Bank or a similar body.