Thursday, 31 May 2007

Superfluous, pernicious, atrocious and abominable: the case against Conditional Cash Transfers

A version of this blog appeared in the IDS Bulletin May 2007 Volume 38 Issue 3 pages 75-78

In 1792, the first consumer boycott was organised to protest against the inhumane treatment of slaves in the production of sugar in the West Indies. In his comic novel of the time, “Melincourt”, Thomas Love Peacock wrote of the trade in sugar that it was “economically superfluous, physically pernicious, morally atrocious and politically abominable”. Much the same could be said of “Conditional Cash Transfers” (CCTs) today!

Physically pernicious

Semantically, the very label “conditional” is imprecise. The definition of what constitutes a CCT is highly ambiguous. The World Bank (which is one of the champions) define it is as follows:

"Conditional cash transfer (CCT) programs aim at reducing poverty in the short term through cash transfers while at the same time trying to encourage investments into the human capital of the next generation by making these transfers conditional upon regular school attendance or the regular use of preventive health care services."[i]

This attempts to limit CCTs to transfers that involve human capital conditionalities, such as access to health and education services. But a cash-for-work scheme is equally “conditional” – the transfer is conditional upon the provision of labour. And many other transfers may also be considered “conditional” – they depend upon a beneficiary turning up at a particular place at a particular time to collect a food ration, or they require a recipient to travel some distance to exchange a voucher for agricultural inputs in a particular retail outlet. Other transfers are conditional on “passive” characteristics of the beneficiary: being HIV-positive, owning land, being over 60 years old, being orphaned, having a disability. In reality, all social transfers are conditional on something. Even a universal fertiliser subsidy is conditional on the beneficiary buying fertiliser. And, taken to its logical extreme, a civil servant may be considered the recipient of a CCT in the sense that he or she receives a cash handout that is conditional on a work requirement … and indeed often makes the same complaints as any other public works welfare recipient: the sometimes irregular receipt of a below-market wage in exchange for a usually pointless occupation!

Politically abominable

Secondly, the term “conditional” smacks of Bretton Woods paternalism. It is redolent of the “conditionalities” imposed by IMF, World Bank and other donors when making loans or implementing budget support programmes, a perpetuation of the mindset that imposed “structural adjustment” and enforced “poverty reduction strategies”. It fails to convey the sense of partnership or inclusion that should be the basis for social protection; and it presupposes that the nanny-state knows better than its citizens how best to use their scant resources – a highly dubious assumption. A much better term, based on the concept of a mutually-agreed partnership between beneficiaries and grant-giving governments would be “compactual” (a neologism borrowed from the idea of a “social compact”, meaning “an agreement … within a society to work together for the benefit of all”[ii]).  This has the advantage of beginning with the letter “c”, thus preserving the acronym “CCT”; and clearly distinguishes such transfers from labour-based transfers, and from other types of social transfer that do not require a reciprocal obligation on the part of the beneficiary.

Economically superfluous

But CCTs are highly questionable from a practical perspective in any case. Even if we accept that there is a justification for governments “insisting” that welfare recipients fulfil certain “obligations” (like attending schools or health clinics), does it actually work to try to force them to do so? It is true that there is some evidence, for example from central and south America[iii], that school attendance and health indicators improve in households that receive CCTs … but who is to say whether this is a feature of the “conditionality” rather than of the transfer itself (or simply the fact of a predictable source of regular income)? In the case of Oportunidades in Mexico, the jury is still out:

“Oportunidades combines three key mechanisms: grants that increase the income of poor households, awareness promotion that emphasises the importance of human capital, and conditionalities that link the two – making the grants conditional on behaviours that reinforce human capital development. The evaluations have successfully demonstrated that all three of these ingredients together can generate very positive results. However, the studies so far have been unable to identify which is most important – the income, the  awareness or the conditionality.”[iv]

Another equally valid reason for observed improvements in school attendance and health indicators (in addition to the 'demand-side' effect of the cash transfer) may well be concurrent 'supply side' measures to improve access to education and health services where these are under way, either linked to CCT programmes or independently.  For example, an evaluation of PROGRESA (now Oportunidades) admits that:

"Since these increased resources related to the quality of services are part of the overall PROGRESA benefit package provided, the evaluation of the program can provide little direct evidence on whether a demand-side intervention is more effective (in terms of impact and/or in terms of cost) relative to a supply-side intervention."[v]

This uncertainty over the effectiveness of conditionality is reinforced by the fact that school attendance and health indicators also improve where cash transfers are made unconditionally: evidence from such schemes in Zambia[vi], Namibia[vii] and Malawi[viii] all show significant increases in beneficiaries’ expenditure on health and education, and in the indicators for resultant health and educational outcomes. In South Africa, where social grants are unconditional:

“extensive evaluations document the substantial impact of social grants – children (particularly girls) in households receiving grants demonstrate better weight-for-height indicators, improved nutrition, less hunger and better school attendance than children in comparable households that do not receive grants. Grant recipient households spend a greater proportion of their income on food and education, and less on alcohol, tobacco and gambling than similar households not receiving grants.”[ix]

So what is the benefit of attaching conditionality?

Again, even if such human capital conditionality were shown to work in some environments (such as in Latin America), it is highly unlikely that it would ever do so elsewhere (such as in Africa). A strong case can be made that CCTs only have a remote chance of success when certain structural conditions are met. Indeed it may be that such “supply-side conditionality” is a far more significant in delivering improved livelihood outcomes: if we want improved school and clinic attendance by the poor, then the best way would be to improve primary education and health services close to where poor people live.

For example, a recent analysis[x] by the Economic Policy Research Institute in South Africa suggested the following criteria for choosing between conditional and unconditional transfers:


Most countries in sub-Saharan Africa would fall into the “unconditional” category on every one of the five counts; and indeed there are few developing countries elsewhere in the world that could convincingly claim to meet a majority of the criteria for “conditional” transfers. In Africa, for example:

  • service delivery in health and education is already overstretched;
  • governments’ administrative capacity is generally weak, such that imposing conditionalities will inevitably divert precious resources from the core objectives of delivering welfare transfers on the one hand, and health and education services on the other;
  • many of the poor and vulnerable find access to limited health and education services difficult and expensive (even when officially “free”): conditionalities will drain their household resources as they seek to comply, but they will receive little in return;
  • because labour is abundant, and work opportunities scarce, there is little incentive for child employment, and school enrolment is already high (especially in countries where primary education is free);
  • numbers in formal employment are very low – typically no more than 20% of the workforce.

Conditional schemes are much more complex to administer than unconditional schemes, and the monitoring of compliance is near-impossible in many cases. There is also the consideration that, within countries, the areas typically inhabited by the most vulnerable groups are often those where health and education services are weakest, making them wholly unsuitable to this kind of approach. Similarly, it is typically the poorest and most vulnerable who will find it most costly to comply with any conditionalities and who are therefore the most likely to be deprived of the benefits if they fail to do so – not the optimal model for a social protection programme! As the Most Reverend Desmond Tutu, Archbishop Emeritus of Cape Town, stated in 2006:

“Conditionalities attached to social transfers tend to prevent the poorest families – the very people who most desperately need income support – from accessing grants.”[xi]

Morally atrocious

Finally, leading on from this, it is morally highly questionable whether a Government (often encouraged by donors) can, on the one hand, proudly tell its citizens that social protection is their basic “human right”; and then, on the other hand, threaten to deprive the neediest among them of that very “right” if they fail to meet certain “conditions”! The “Universal Declaration of Human Rights”, signed in 1948, states that “everyone, as a member of society, has the right to social security” (Article 22), to “social protection” (Article 23), and to “security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood” (Article 25). And many governments since then have either enshrined a right to social protection in their constitutions, or have signed up to grandiose declarations such as the Livingstone “Call for Action”, agreed by thirteen African governments in 2006, which clearly accepts that “social protection is a basic human right”. Imagine substituting another such “right”, in the context of conditional cash transfers: what kind of international outcry would ensue if a government chose to deprive its citizens of water, or of shelter, or even of life, if they failed to send their children to school or attend a health clinic!

The message is clear: CCTs risk becoming the twenty-first century equivalent of the besmirched sugar trade!



[i] World Bank website: http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALPROTECTION/EXTSAFETYNETSANDTRANSFERS/0,,contentMDK:20615138~menuPK:282766~pagePK:148956~piPK:216618~theSitePK:282761,00.html

[ii] Chambers 21st Century Dictionary.

[iii] For example the oft-cited Oportunidades and Bolsa Familia programmes in Mexico and Brazil respectively.

[iv] “Designing and Implementing Social Transfer Programmes”, EPRI, 2006.

[v]  “PROGRESA and its Impacts on the Welfare of Rural Households in Mexico, IFPRI Research Report 139, 2005

[vi] “Evaluation Report – Kalomo Social Cash Transfers Scheme”, MCDSS/GTZ, 2006.

[vii] “Social Pensions in Namibia and South Africa”, Devereux, 2001.

[viii] “After the FACT”, Devereux, Mvula & Solomon, 2006.

[ix] “Designing and Implementing Social Transfer Programmes”, Samson, van Niekerk & MacQuene, 2006.

[x] Presentation to the Third International Conditional Cash Transfers Conference, Istanbul, 2006.

[xi] “The Role of Social Transfers in Fighting Poverty and Promoting Development”. Address by Most Reverend Desmond Tutu, Archbishop Emeritus of Cape Town, to the conference “Universalism Promotes Development”, organised by the Economic Policy Research Institute, Cape Town, November 2–4, 2006.


Wednesday, 2 May 2007

Public Works Don't

This Comment draws heavily on the excellent, comprehensive and more nuanced paper by Anna McCord Win-win or Lose? An Examination of the Use of Public Works as a Social Protection Instrument in Situations of Chronic Poverty (2005). First presented to the Conference on Social Protection for Chronic Poverty, IDPM; published as ‘The Social Protection Function of Short Term Public Works Programmes in the Context of Chronic Poverty’ in Barrientos A and Hulme D (eds) Social Protection for the Poor and Poorest: Risks, Needs and Rights, Palgrave, United Kingdom.

Public works are a popular social protection instrument throughout southern Africa. They can be effective as a response to transient or cyclical crises, by smoothing consumption and preventing the distress selling of assets. But programmes offering short term employment opportunities may not work so well in situations of chronic poverty. Even their main advocates, such as the World Bank, admit that “public works are essentially a temporary safety net and should never be used as a permanent escape route from poverty”[i]. Yet donors, including the World Bank and DFID, continue to advocate and support them, claiming unattainable goals such as “enhanced livelihoods for the poor people of Malawi[ii]”. Why?

There are four attractions of public works programmes to donors and governments, which override even their own appraisals of the actual benefits. These are that public works: 

  • are consistent with the ideology of not giving beneficiaries “something for nothing” thus inducing “dependency”;
  • provide a “win-win” combination of welfare transfers and the creation of productive assets;
  • appeal politically because they “create jobs”;
  • solve the complex problem of targeting by being “self-targeted”.

But each of these four apparent attractions can be disputed and invalidated.

The first misconception is that there is an intrinsic benefit in making the poor work in return for social protection. This is perceived to prevent “benefit scroungers”, and to reduce “dependency”. But it is hard to apply the term “benefit scrounger” when the values of transfers made through public works programmes are deliberately set so low that they leave participants well below the poverty line. And, even if the concept of “dependency” is accepted (which many would debate), it is difficult to understand how a dependency on the state to provide poorly-paid employment is any less dangerous than a dependency on the state to provide direct transfers. There is also an argument that public works confer “dignity” through employment, and that they impart skills which may be useful in finding future work opportunities. But there is an equally strong counter-argument that participation in public works may stigmatise rather than empower; and that most programmes do not last long enough to impart skills significantly greater than those that the participant already had. In addition, the work requirement may have negative impacts in terms of the opportunity cost it implies, by diverting labour away from domestic production. In general, because poor people cannot afford to be idle, they necessarily have to give up some other form of income in order to join a public works programme, which reduces still further the net value of the transfer.

The second questionable attraction of public works is that they create assets for the beneficiaries and for the community. But, by and large, the beneficial economic and developmental value of the assets created is assumed rather than empirically established. Where these assets are designed to reduce environmental threats, such as flooding in Bangladesh, the benefit is more readily apparent; but where they are intended to promote general economic growth, the value is less certain. In some cases, the construction of a road or community structure may have positive direct and indirect benefits to the community, but this must be critically evaluated … and in reality very seldom is. At worst, assets created through public works may be white elephants, unstrategically selected and uncoordinated with broader development initiatives. Because of the emphasis on labour-intensive approaches and lack of knowledge on the part of programme managers of how to carry out labour intensive engineering projects,  there is a risk that the quality of the assets created may be low; and frequently little provision is made for their maintenance and repair. To be of long-term benefit to the poor, the impact of improved road access or rehabilitated irrigation would require the public works programme (or complementary support) to provide a sufficient asset base and risk insurance for the beneficiaries to engage in new or diversified economic activities. On top of this, public works are a very expensive way to make transfers – the cost of transferring one unit to the poorest in Malawi is calculated to be 13.9 units through public works, compared with 1.7 for a direct cash transfer[iii]: so the economic value of the assets created has to be significant in order to justify such a cost premium.

Third, public works are popular with politicians because the government can claim to be creating jobs (and it is no coincidence that public works programmes are frequently initiated in the run-up to elections!). However, such a claim may well be disingenuous. The nature of public works in southern Africa is short term, usually lasting no more than two to four months. Whilst participants do work in return for payment, and thereby qualify as employees, the short term nature of their employment can only make a limited contribution to their longer term livelihoods. Offering a temporary consumption smoothing intervention in the context of chronic un(der)employment and poverty represents a serious mismatch between problem and policy response. Only one-third of participants on a DFID and ILO supported programme in South Africa considered that the programme would have any sustained impact on their livelihoods[iv].

Finally, public works programmes are touted as offering a simple alternative to other more complex and costly targeting approaches. This is based on the premise that the poorest will self-select themselves because of the work requirement and low wages, which are conventionally set at or below prevailing rates, and which the less poor will therefore find unattractive. But this assumes a perfectly functioning labour market. In reality, there is plenty of evidence of significant inclusion and exclusion errors, because the marginal value of labour varies within and between households. Thus public works may be attractive to surplus labour in less poor households, and unattractive to poorer households with limited labour. Moreover, the adoption of extremely low wages is often in tension with the social protection objectives of public works programmes, since such low wages are unlikely to have any significant impact on chronic poverty. And where the scale of public works employment is trivial in a context of mass un(der)employment (eg in South Africa, where the ratio is 200,000 to 4 million), demand will always outstrip supply, and there is a significant risk of the leakage of employment opportunities to those who are not among the poorest.

For public works to be used effectively in situations of chronic poverty, the literature is broadly consistent on key considerations, highlighting the need for:

  • Long-term, sustained public works employment;
  • Integration of public works programme with other developmental initiatives;
  • Linkages with micro-finance, and micro-enterprise activities;
  • Creation of assets which directly impact on reducing vulnerability and promoting livelihoods;
  • Flexible or piece based employment, enabling participants to combine public works employment with other responsibilities and income earning opportunities;
  • Higher wages; and
  • Independent poverty targeting measures.

Very few, if any, public works programmes currently operating in southern Africa conform to all of these requirements. Even were they to do so, the alternative of straight cash grants may well be more efficient and desirable. Transfers can then be better targeted at those who need them, rather than just at those who are able to work for them. And any public work requirement will always have an opportunity cost: it will take people away from other work they could be doing that would more directly benefit their households.

Yet donors and governments continue to endorse public works over straight cash transfers, in the face of both theoretical and empirical evidence, on the basis essentially of ideology rather than evidence. The kind of public works programmes often advocated may not, in the context of chronic poverty, (i) avoid ‘dependency’, (ii) build assets which will promote livelihoods or growth, (iii) create jobs or (iv) target the poorest. This represents a victory of political over developmental considerations in the sphere of social protection.



[i] Subbarao, K., Bonnerjee, A., Braithwaite, J., Carvalho, S., Ezemenari, K., Graham, C., and Thompson, A. (1997). Safety Net Programs and Poverty Reduction, Lessons from Cross Country Experience. Directions in Development.  The World Bank, Washington, D.C.

[ii] Department for International Development (DFID) (2004).  Sustainable Livelihoods Through Inputs for Assets Output to Purpose Review, DFID Malawi, September 2004, unpublished.

[iii] Smith, W. J. (2001).  Spending on Safety Nets for the Poor: how Much, For How Many? The Case of Malawi.  Africa Region Working Paper Series, Number 11. The World Bank, Washington, D.C.

[iv] McCord, A. (2004a) Policy Expectations and Programme Reality: The Poverty Reduction and Employment Performance of Two Public Works Programmes in South Africa. Economics and Statistics Analysis Unit & Public Works Research Project, SALDRU, School of Economics, University of Cape Town.  ESAU Working Paper, Overseas Development Institute, London.



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