Conditional Cash Programs Are Powerful, But Not Magic

Conditional cash transfer programs like "Bolsa Familia" in Brazil seem like the next big thing after microfinance, and Brazil's and Mexico's programs certainly have an impressive reach. Their contributions to alleviating poverty now and laying the proper educational foundations to alleviate poverty in the future are certainly elegant. However, a CCT program is not a magic bullet, and we should not expect it to solve all the complex problems of poverty. In fact, research on "Bolsa Familia" cited by The Economist indicated that the program does not work as well in Brazil's urban areas as it does in rural ones. Namely, the small amounts of cash transferred to families represents a significant boost to household income in rural areas, but it has less of an effect on urban families. In addition, the opportunity cost in cities is higher-- children who go to school "miss out" on economic opportunities such as selling souvenirs to tourists, which offer higher financial returns than the small cash transfers. In rural areas, children don't have this option. Of course, CCT programs are doing a great deal of good, and their scalability is enviable. But governments must not think that they can adopt a CCT program and just sit back and relax. The programs must be viewed for what they are-- as one of many powerful tools that must be employed in tandem to achieve the desired results.