Conditional Cash Transfers: Generating Buzz, But Let’s Think Outside the Box – New America

Report on Conditional Cash Transfers and Their Role in Achieving Sustainable Development Goals

Introduction

At the recent launch of the World Bank Policy Research Report titled Conditional Cash Transfers: Reducing Present and Future Poverty, significant attention was given to the impact of Conditional Cash Transfer (CCT) programs globally. These programs, which began with Mexico’s Oportunidades initiative, have demonstrated effectiveness as social policy tools that contribute to poverty reduction and align with multiple Sustainable Development Goals (SDGs).

Global Expansion and Recognition of CCT Programs

• CCT programs have expanded from Latin America to Africa and the United States, reflecting their growing importance in social protection strategies.
• The World Bank announced plans to extend CCT projects to six additional countries within the year, underscoring international commitment to poverty alleviation.
• These programs directly contribute to SDG 1 (No Poverty), SDG 3 (Good Health and Well-being), and SDG 4 (Quality Education) by providing conditional support to vulnerable populations.

Limitations and Opportunities for Innovation

Experts, including Santiago Levy, the architect of Oportunidades, emphasized that CCTs are not universally effective and must be integrated within broader social safety nets to maximize impact.

However, there is growing interest in leveraging CCTs to promote financial inclusion and asset-building among the poor, which aligns with SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reduced Inequalities).

Evidence of Asset Building and Financial Inclusion

1. Research by Tina Rosenberg highlighted that many women beneficiaries of Oportunidades invested part of their cash transfers into sustainable small businesses, enhancing family income and economic stability.
2. Programs such as Proyecto Capital in Peru integrate CCTs with initiatives encouraging savings, asset accumulation, and financial literacy.
3. New York City’s Opportunity NYC program links cash transfers to bank accounts, promoting savings and reducing transaction costs.
4. Empirical data from Latin America shows positive outcomes:
   • Participants in Paraguay’s Tekporã program increased savings by 20%.
   • Mexican families invested 12% of their transfers in income-generating activities and saved more when payments were bank-mediated (source).

Implications for Sustainable Development Goals

• SDG 1: No Poverty – CCTs provide immediate financial support to poor households, reducing poverty levels.
• SDG 8: Decent Work and Economic Growth – By encouraging investment in small businesses and productive assets, CCTs foster economic empowerment.
• SDG 10: Reduced Inequalities – Financial inclusion initiatives linked to CCTs help bridge gaps between the unbanked and formal financial systems.
• SDG 5: Gender Equality – Many CCT programs target women, promoting their economic participation and empowerment.

Future Directions and Research

The Global Assets Project is currently exploring the potential of CCTs to enhance savings and asset-building among poor populations. A forthcoming report will provide further insights into how these programs can be innovatively designed to support financial inclusion and sustainable development.

Continued dialogue and research are essential to reimagine CCTs beyond traditional frameworks, ensuring they contribute effectively to the achievement of the SDGs.

1. Sustainable Development Goals (SDGs) Addressed or Connected to the Issues Highlighted in the Article

1. SDG 1: No Poverty
   • The article discusses Conditional Cash Transfer (CCT) programs aimed at reducing poverty by providing financial support to poor households.
2. SDG 8: Decent Work and Economic Growth
   • It highlights how CCTs help beneficiaries invest in small businesses and income-generating activities, promoting economic growth and entrepreneurship.
3. SDG 10: Reduced Inequalities
   • The focus on financial inclusion and helping the unbanked poor access formal financial services addresses inequality issues.
4. SDG 5: Gender Equality
   • The article mentions women investing parts of their transfers in small businesses, indicating empowerment of women through economic means.

2. Specific Targets Under Those SDGs Identified Based on the Article’s Content

1. SDG 1: No Poverty
   • Target 1.2: Reduce at least by half the proportion of men, women and children living in poverty in all its dimensions.
   • Target 1.3: Implement nationally appropriate social protection systems and measures for all, including floors, and achieve substantial coverage of the poor and vulnerable.
2. SDG 8: Decent Work and Economic Growth
   • Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation.
3. SDG 10: Reduced Inequalities
   • Target 10.2: Empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.
   • Target 10.c: Reduce to less than 3% the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5%.
4. SDG 5: Gender Equality
   • Target 5.a: Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources.

3. Indicators Mentioned or Implied in the Article to Measure Progress Towards the Identified Targets

1. Indicator for SDG 1 (No Poverty)
   • Proportion of population living below the national poverty line before and after receiving CCTs.
   • Coverage rate of social protection programs among the poor and vulnerable.
2. Indicator for SDG 8 (Decent Work and Economic Growth)
   • Percentage of households investing in income-generating activities or small businesses as a result of CCT participation.
   • Increase in household income attributable to CCT programs.
3. Indicator for SDG 10 (Reduced Inequalities)
   • Increase in savings rates among poor households participating in CCT programs.
   • Proportion of CCT payments made through formal financial institutions (e.g., banks).
   • Reduction in transaction costs related to financial services for the poor.
4. Indicator for SDG 5 (Gender Equality)
   • Proportion of women beneficiaries investing in small businesses or productive assets.
   • Access to financial services by women participating in CCT programs.

4. Table of SDGs, Targets, and Indicators

Source: newamerica.org