The beauty (and frustration) of social entrepreneurship is discovering that what works in one part of the world just may not work in another part. Therein lies the difficulty of establishing a cohesive strategy for tackling poverty globally: each situation is unique.
Cash Transfer Programs are an attempt at poverty reduction that have struck a powerful nerve on both sides of the debate. Simply put, Cash Transfer Programs (CTPs) are the act of distributing cash to the poor; and at times, the payment is dependent upon a certain action by the poor. Providing a family with additional income if their children attend school on a regular basis is an example of an action-dependent (or ‘restricted’) CTP.
There are many layers to the debate on whether or not CTPs are an effective method to improving the lives of those at the Bottom of the Pyramid. I am not going to dive into whether or not the programs should be in existence; rather, I want to look at the difference between restricted and unrestricted CTPs.
Last year, Newsweek published an article on the implementation and adoption of CTPs in various parts of the world. In short, their successes are promising and impressive. Unrestricted CTPs operate under the assumption that, by providing a supplementary income to the BoP, the money will be used in the most effective way – a decision made by the recipients themselves. What I am deeming ‘restricted CTPs’ are programs that are only paid out to the recipient if a certain action is maintained (purchasing certain foods or medicines, attending school on a regular basis, etc)
Cara Kulwicki, from the blog, Feministe, takes a hard line approach to CTPs. Although she cautions against developed countries “making assumptions” about what will improve BoP situations, she spends much of her article generalizing and describing how “in the U.S. and other Western nations, we have pervasive stereotypes about poor people being lazy, irresponsible, and to blame for their own poverty.” She goes on to state how “[a]cknowledging the real reasons behind global poverty would require rich Western nations to take some responsibility.”
Through her harsh and almost self-loathing rhetoric, she makes her case for unrestricted CTPs, saying that the money distributed to developing nations is “theirs”, and they should enjoy the same right to use it as they see fit. I think that’s overly idealistic and simplistic. Aid or cash transfers should not be given out unrestricted due to guilt, or a way of developed nations to “take responsibility” for poverty.
While I do believe there might be a case for unrestricted CTPs (especially in cases where it’s proven that restricted CTPs don’t have an effect on desired behavior), in general I feel that this type of program is all too similar to the type of international aid that has shown time and time again to have less than the desired effect.
Linking a payment to some of the most basic and critical human needs (education, healthcare, savings, etc) is not degrading to the local population, nor does it fill the developed nations with the need to “spread their all knowing sense of rightness, to enforce their system of beliefs regarding capitalism and social mores”, as Cara crudely points out. In an uncertain world with unstable governments, putting some reassurance that money isn’t being poured out without a specific goal in mind is a smart thing to do.
Restricted CTPs can, at best, be viewed as a single piece of the puzzle that we call poverty eradication. They are designed to provide a combination of additional income and incentive towards better living (education, healthier eating, medical care, etc). Yet a single puzzle piece is ineffective when it doesn’t have its complementary pieces. For what good is it to encourage school attendance if the only available schools are barely functional?
When deciding whether or not to implement a restricted CTP in a certain area, it is important to keep in mind a few factors. First, market research should be done to ensure the success of driving behavior with money. As noted in Newsweek, Malawai was an example where CTPs were not effective in driving more students to attend school, where as South Africa has seen promising success with its Child Support Grant. Understanding the target population and culture is necessary to avoid assuming that certain programs will work everywhere.
Second, and I’d argue the most critical: the goals for the CTP must be clearly laid out well in advance. Is the goal of the program to simply encourage school attendance, or is the objective to increase secondary school enrollment via increased school attendance? Here is also where I feel that unrestricted CTPs can be ineffective. Is the goal simple wealth redistribution, or is it focused on a specific goal? How can you have influence towards achieving that goal? Often times it is easy to get lost in determining what the actual goal of the program is, which can lead to the incorrect implementation of a CTP where another program might be more effective.
Third, once the market is deemed ready and the goals laid out, the complementary capabilities in the location must be assessed. If increased attendance is the goal of the CTP, then what state are the schools in? Do they have teachers that show up on a regular basis? Do they even have books, supplies, and a stable building?
Establishing a base level to begin from and to work together with CTPs will help to complete a part of the puzzle.
However, one point that Cara and I do agree on from Newsweek is that “cash-transfer programs are hardly a magic bullet.” I think this is an important thought to keep in mind when evaluating any social program, especially on a global level. When properly researched and implemented in conjunction with other programs, CTPs are yet another tool that developing nations can arm themselves with in the fight against global poverty.