Conditional Cash Transfers to Break Cycle of Poverty

In 2008 there were 69 million children who were not attending school. Most of these children live in Sub-Saharan Africa and Southern Asia.  Over the past two years, enrollment has increased to 89 percent.  Some of this improvement has come from conditional cash transfer programs, such as those implemented in the Philippines.  Conditional cash transfer programs allocate funds among the poorest families on a provisional basis.  Provisions usually include sending children to school and receiving routine medical check-ups.  Conditional cash transfers are seen as an effective tool for increasing school attendance and therefore improving human capital to alleviate the poverty of communities.

 

Although conditional cash transfers can improve conditions, there are a few problems that can arise and should be addressed before implementing a program.  This program can increase enrollment at already established schools, but cannot provide the funds to build a school if the poor families live in an area where one does not already exist.  Also, the program cannot necessarily improve quality unless there are other measures aimed at that problem.  The conditional cash transfer programs can be successful only if proper monitoring exists and it is paired with other components of social policy.  However, the government is responsible for these contributions, and must support the program. 

Despite these potential drawbacks, the partnership between the Asian Development Bank and the Philippines is proving successful in increasing school attendance and improving health among the country’s poorest families.  In 2007, the Asian Development Bank began providing the Philippines with funds for a conditional cash transfer program called Pantawid Pamilyang Pilipino Program (4P).  The Filipino government uses the country’s local banks to distribute the cash transfers to families.  It is a beneficial program for the country, in which a third of the population lives in poverty.  Almost one in five children in the Philippines never attends primary school, while three in ten drop out.  Many of these children also do not receive preventative healthcare.  The 4P program distributes on average 31 U.S. dollars to families in contract on a provisional basis.  Parents must send their children to school for 85 percent of every month and receive monthly medical check-ups for the whole family.  The parents must also attend family development classes that include lessons on budgeting, time management, and family care.  Over 500,000 families are receiving conditional cash transfers from the Asian Development Bank’s loan of 400 million dollars to the Philippine government.  Families’ incomes are capable of increasing by 20 percent annually as a result of these transfers.  The 4P program is expected to benefit 2.3 million families by the end of 2011.  Conditional cash transfers have been successful in reducing poverty in the Philippines because the program increases human capital in a country with a service-oriented economy.  Since 2007, school attendance has increased, more children have received immunizations, and more women have obtained prenatal medical care.

The Philippines’ success story shows that the use of conditional cash transfers can and should be implemented in other countries of similar political support and funding.  The cycle of poverty can be broken with a combination of increased human capital through education and healthcare.

By Mary Ann Mackey and Laura Bowman 

Sources:

http://www.adb.org/Media/Articles/2010/13316-philippines-conditional-cash-transfers/PHI-CCT-NR.pdf

 http://www.adb.org/Documents/EDRC/Policy_Briefs/PB051.pdf

 http://adb.org/Documents/Fact_Sheets/PHI.pdf

 http://www.un.org/millenniumgoals/education.shtml

 http://newsinfo.inquirerheadlines/nation/view/20100903-290239/1M-poor-families-to-get-govt-cash-aid

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