Conditional cash transfers

PODCAST: The Promise of Savings-Linked Conditional Cash Transfers

Jamie Zimmerman — Tue, 12 May 2009 16:09:00 -0400

On April 29^th, the Global Assets Project hosted an event to launch its newest policy brief, "Savings-Linked Conditional Cash Transfers: A New Policy Approach to Global Poverty Reduction," at the New America Foundation. By request, we have created a 10 minute Podcast summarizing the paper and key points from the event, for those unable to attend the two-hour event or watch or listen to it in its entirety on our website or YouTube.

The event, which attracted almost 900 participants in house and (mostly) via webcast, explored the opportunities for linkages between CCTs and savings accounts, the potential impact on financial inclusion and economic empowerment as well as the possible challenges of such a proposal. While the concept of financial inclusion and economic empowerment through CCTs is still in its infancy, participants agreed that it is already building incredible momentum in both social policy and financial services fields.

The podcast , narrated by Jamie M. Zimmerman, includes highlighted remarks from the policy brief co-author Yves Moury (Proyecto Capital) and panelists Michelle Adato (IFPRI), Mark Pickens (CGAP), Marguerite Robinson, and Luis Tejerina (IADB). Please visit our website or contact us for additional information about the policy brief or the event.

Proyecto Capital: More on CCTs and Savings from Latin America

Leila Seradj — Tue, 24 Mar 2009 22:09:00 -0400

I've blogged about conditional cash transfers (CCTs) before, but when I opened my inbox yesterday morning to find an email notifying me of Proyecto Capital's website launch, I couldn't help but keep writing about it.

Proyecto Capital is a regional initiative (affiliated with the Global Assets Project) that seeks to support governments within Latin America and the Caribbean in the design, implementation, and evaluation of savings-linked conditional cash transfer (CCT) policies, with the goal of facilitating the enhancement and protection of the poor, primarily through asset building.

Their Puno-Cusco Corridor Development Project is highlighted in a forthcoming paper co-authored by my colleague Jamie Zimmerman and Proyecto Capital Director Yves Moury.

As the paper explores the potential of linking CCTs with savings and asset building, it examines the Puno-Cusco project-a CCT initiative of the Peruvian government affiliated with Proyecto Capital that links rural women with savings accounts. A recent evaluation of the project demonstrates that, while there are challenges associated with expanding access to financial services (particularly savings) to low-income, rural women, they indeed do save and the element of empowerment that emerges is not insignificant.

Taking a look at initiatives that explicitly link CCTs with savings-such as the Puno-Cusco Project, or Oportunidades's youth savings program (Jóvenes con Oportunidades)-and examining existing CCT programs that could potentially link to savings, Zimmerman and Moury argue that the time is ripe to link CCTs to savings as a two-pronged strategy of supplementing income and building productive assets, while facilitating the financial inclusion of the poor.

The literature and evidence on CCTs and savings is still slim, but in the meanwhile, keep an eye out for their paper in the coming weeks-- one that will surely add to a small but growing discourse on the evolving nature of CCTs.

Conditional Cash Transfers: Generating Buzz, But Let's Think Outside the Box

Leila Seradj — Wed, 11 Feb 2009 15:56:00 -0500

At yesterday's launch of the World Bank Policy Research Report, Conditional Cash Transfers: Reducing Present and Future Poverty, New York Times contributing writer Tina Rosenberg recounted her article pitch to her editors at the Times. Asking her why she was so intent on going to Mexico to cover Oportunidades, the conditional cash transfer program that started it all, she answered: Because it's a social policy program that actually works.

From Latin America, to Africa, to even the United States, conditional cash transfer (CCT) programs are sprouting everywhere and garnering an increasing amount of attention. As the packed auditorium demonstrated yesterday, the buzz has long since reached Washington. And as Justin Lin, Chief Economist for Development Economics, noted, the World Bank will be extending CCT projects to six additional countries this year.

In the scramble of eager participants that shot their hands up breathlessly to seize their chance to ask their multi-part queries to the pre-eminent experts on CCTs, I didn't have the chance to ask the question in the back of my mind: How can CCTs be used to incentivize and change savings and asset-building behavior?

CCT programs aren't a magic bullet, the panelists reiterated. Santiago Levy-- the brainchild behind Oportunidades-- emphasized that CCT programs don't work everywhere, and certainly, they must function within a larger network of social safety net programs provided by the government.

But I wonder how much more powerful they could be if they were used as instruments to help the poor increase savings and build assets, and served as a gateway into formal financial inclusion of the unbanked.

Rosenberg mentioned that, in the course of her time researching the impact of Oportunidades in several villages in Mexico for her New York Times Magazine article, that many women invested parts of their transfer in small businesses. These businesses were sustainable, and added to family income.

If that's the case, then certainly there's room to explore the role of CCT programs to help the poor save, accumulate assets, and increase financial inclusion.

In the U.S. and Latin America, pilot projects and formal government programs are beginning to test these waters. Proyecto Capital in Peru is working to connect, combine, and adjust CCT policies with those that encourage savings, asset building, financial inclusion, and access to financial and entrepreneurial "know-how" for the poor. New York City's Opportunity NYC program links payments to bank accounts so as to encourage savings and reduce services associated with high transaction costs. And evidence from Latin America demonstrates that households participating in CCT programs increase their savings rates and investment in productive assets. Participants of Paraguay's Tekporã program saved 20% more due to their participation in the program; evidence from Mexico likewise affirms that families invested 12% of transfers in income-generating activities, and saved more when payments were made through banks.

So on the day of the launch of this seminal study, it seems timely to start thinking about CCTs in more innovative ways that increases financial inclusion, and helps people save and build assets. This is only the beginning of the conversation-- the Global Assets Project is beginning to ask these questions, and will release a report exploring the potential between CCTs and savings in the coming weeks. In the meanwhile, let's hope that the lively discussion that was sparked at yesterday's event continues in ways that think about CCTs outside the proverbial box.

Last Day to Vote: Building Assets into a 21st Century Foreign Assistance Framework

Jamie Zimmerman — Mon, 12 Jan 2009 19:48:00 -0500

Its last day of the Better World Campaign's On Day One project and there is still time to vote for the idea you think President-Elect Barak Obama should prioritize on the first day of the next administration for improving the United State's image in the world. When blogger Mark Goldberg of the UN Foundation came to New America in the spring of 2008 soliciting ideas for policy proposals, I thought it was little more than a fun experiment in the use of new media to express opinions. I had no idea the Campaign would face the ideas off against each other in November, narrowing 81 selected ideas down to 9 for '09 (9 big ideas for the incoming president to consider upon taking office). Or that my idea to reform foreign assistance (to focus the allocation of funds more squarely on the social and economic empowerment of poor people) would win the Global Poverty category. Or that there would be a Round 2 to the contest in which the 9 for '09 would face off yet again.

I don't expect to win the contest -- my idea is up against some even more lofty and innovative competitors. On the other hand, that this idea - that funds should be more smartly allocated to providing opportunities for asset building and wealth creating empowerment for the poor, rather than wasted and corrupted on ineffectual top-down projects - has resonated with voters in this first place (and making a fair showing at that), should be utterly encouraging for those of us working to elevate asset-building microfinance and social policies around the globe.

Even in a world of economic uncertainty, there is a still a belief that given the right tools, the poor and traditionally disenfranchised can stake their own claim it the dream of a better future. The microcredit movement has helped shape this confidence in the power of individuals to lift themselves out of poverty. Yet, the tools people need to take ownership of their lives extend well beyond microcredit, including (but certainly not limited to) an identity that will allow them access to the formal economy; property rights so that they can take ownership in their land, home, or business; access to an array of financial services such as savings accounts allow them to save for future investments in education, a business or old age and insurance to further protect them from the vulnerability of any number of shocks, and; access to policies and programs that facilitate this process, such as child development accounts, conditional cash transfers, or other microfinance-plus initiatives.

Reforming the foreign assistance framework to redirect resources toward bottom-up programs is a fairly specific policy idea, yet it finds itself competing with much grander goals. In this final day of the contest, I thank voters for their encouraging show of interest in telling President Obama to break the wasteful status quo in development assistance spending and, instead, concentrate on something with potentially a much greater return on investment - the empowerment of people.