Conditional cash transfers

Today, the Asset Building Program and the Center for Social Development at the Washington University in St. Louis released the final report in the “Creating a Financial Stake in College” series. The fourth report “Ideas for Refining Children’s Savings Account Proposals” makes a case for establishing formal mechanisms for low- and middle-income children to save. Author William Elliott argues that a systematic, national approach to children’s savings accounts is a critical part of improving access to postsecondary education, particularly for low- and middle-income students.

“Creating a Financial Stake in College” is a four-part series of reports that focuses on the relationship between children’s savings and improving college success. This series examines: (1) why policymakers should care about savings, (2) the relationship between inequality and bank account ownership, (3) the connections between savings and college attendance, and (4) recommendations to refine children’s savings account proposals.

Last week, the Economist ran a series of articles on India’s Unique ID program that echoed themes that the Global Assets Project has been writing about for some time. Specifically, as we have argued, the Economist pointed out that delivering public benefits as cash into recipients’ bank accounts, as opposed to via in-kind methods such as grain, would make the Indian government more efficient, prevent corruption and eliminate ghost workers.

The Global Assets Project has written extensively about the virtues of international aid agencies and national governments transferring money directly to poor households. As such, we are thrilled to see a US-based NGO, GiveDirectly, taking this idea "to the streets" and enabling people to directly donate money to poor households in Kenya via their mobile phones. Similar to other cash-transfer programs, GiveDirectly’s model is incredibly efficient, with around 90 cents of every dollar ending up in the hands of beneficiaries, and enables recipients to decide for themselves how to go about meeting their needs.

“If it could rid itself of gender discrimination, the average developing country would grow at least two percentage points faster each year.”  At least so argues Marcelo Giugale, the World Bank’s Director for Poverty Reduction and Economic Management in Africa, in a recent op-ed that likens the current state of many global economies to one in which “half of all machines [are] misplaced: tractors [are] sent to hospitals, brain scanners to barber shops, hair driers to construction sites, cranes to car factories and crash-test dummies to farms.”

Yesterday in the Mexican municipality of Batopilas, President Felipe Calderon announced “the largest banking access program in the world that is targeted at the poorest people.” More than 6 million families, all current participants in Mexico’s government public benefit program Oportunidades, would benefit from the Calderon’s efforts, which he explained would help reduce the gap between the rich and the poor.

Today Secretary of State Hillary Clinton arrives in Busan, South Korea to attend the 4th High Level Forum on Aid Effectiveness. She’ll join about 2000 other representatives of governments, civil society organizations and the private sector to “review global progress in improving the impact and value for money of development aid and make new commitments to further ensure that aid helps reduce poverty and supports progress in meeting the Millennium Development Goals.” The Busan Forum follows earlier fora in Rome (2003), Paris (2005) and Accra (2008), all of which aimed to develop and outline principles for aid effectivness.

Late last month, YouthSave’s core Research Advisory Council (RAC) member Carolina Trivelli was sworn in as Peru’s first Minister of Social Inclusion. Trivelli was most recently Director at the Instituto de Estudios Peruanos and has worked with Proyecto Capital and NAF on linking conditional cash transfer (CCT) programs with financial inclusion strategies.

Last week, Ms. Trivelli graciously agreed to answer some questions about her appointment and upcoming plans.

It’s not often that you’re hanging on every word of an audit, but the Department for International Development’s (DFID’s) Report by the Comptroller and Auditor General, “Transferring Cash and Assets to the Poor” is quite the page-turner. As meticulously as one could imagine, the UK’s National Audit Office scrutinizes every aspect of DFID’s approach, execution, and follow-up in giving resources directly to people in poverty, which, it hastens to point out, is opposed to “widely prevalent development models.”

What’s amazing is that, under such intense scrutiny, cash transfer programs come out looking less like a fad and more like a mainstay in international development efforts.

“It’s always important to save. You never know when you’re going to need something and not have money (…) for when your children get sick or something like that (…) it’s a good way to buy things, or to start a business.”

Yaneth Flores Vargas is just one of the success stories to emerge from the pilot savings program of Familia JUNTOS, the focus of a recent workshop – “Conditional Cash Transfer Programs and Financial Inclusion: An Encounter in Progress” – that the New America Foundation’s Global Savings and Social Protection initiative attended in Peru.