The Power and Limitations of Conditional Cash Transfers

In the article, “To Beat Back Poverty, Pay the Poor”, Rosenberg explains successful programs in Brazil and Mexico called Bolsa Familia and Oportunidades respectively. These programs are conditional cash transfer programs, where the government pays families in poverty for reaching certain milestones, such as keeping their kids in school or going for medical checkups. As a result of these programs, both Brazil and Mexico have been able to reduce their poverty rates significantly, proving that governments can make a positive impact through conditional payments.

Although conditional cash transfer programs have demonstrated their ability to significantly improve the lives of many, the question is whether these programs can be successfully applied to any country. What are the limitations of such programs?

A prerequisite that comes to mind in order to facilitate the success of conditional cash transfer programs is the presence of a strong and stable government. Because the program relies on regular payments from the government, there must be extensive investment in tracking the progress of the families. An unstable or extremely decentralized government would not have the capability to monitor progress or dole out payments on a timely schedule. Thus, conditional cash transfer programs would likely fail in countries with political instability.

Another limitation of conditional cash transfer programs is the assumption that all poverty stricken families have access to schools and health care facilities to complete the milestones. This is often not the case at all. For example, if a poor family lives in a remote village without roads leading to the nearest school or hospital, they may be excluded from successfully completing the requirements. Simply traveling to the nearest school or hospital may be a monumental obstacle for a remote family. Subsequently, that family would also be ineligible for the government payments, although they are the ones whose lives would likely be improved the most. Thus, the assumption that all poor families are able to complete the requirements to receive payment is flawed. It completely neglects the poorest of the poor who are still left without help.

Conditional cash transfer programs are certainly powerful tools for countries to reduce poverty rates, but still, there are limitations and questions that require further research before this program model can be successfully applied to all countries.