Cash transfers can reduce childhood poverty

Forty percent of children in developing countries struggle to survive on less than one US dollar a day, according to the United Nations Children’s Fund (UNICEF). Childhood poverty often leads to long term vulnerability. It is associated with lower educational attainment and schooling which affects future earning potential and well-being. Cash transfers can protect people’s well-being as well enable them to invest in their future.

Research from the University of Manchester in the UK suggests that a new generation of cash payment or transfer programmes recently introduced in Latin America has the potential to alleviate childhood poverty by ensuring children’s development and reducing future vulnerability. Poor households’ responses to poverty, such as withdrawing children from school or not accessing health care worsens poverty cycles. These programmes recognise this and provide cash transfers to improve household consumption and support key investments in education and health.

Cash transfers have a number of advantages. Beneficiary households know best how to use their resources to improve their standard of living. Cash transfers have a positive impact on the local economy when the money is spent. Compared to benefits such as school lunches, cash transfer programmes are less demanding in terms of administration and are easier to budget.

Cash transfers need not be conditional. South Africa’s Child Support Grant, which provides an unconditional cash transfer to the parents or guardians of children in poor households, is effective as it is well-targeted. Extending these programmes to very poor countries may pose difficulties, but Bangladesh’s Food/Cash for Education programme, Honduras’ ‘Programa de Asignación’ Familiar and Nicaragua’s ‘Red de Protección Social’ show these are not insurmountable.

Policymakers have to be aware that cash transfer programmes:

• are more effective in reaching out to orphans and vulnerable children in child-headed households when they are combined with child rights issues than when implemented in isolation
• need to take into account how households allocate resources among different members in response to specific social and economic conditions
• cannot be effective on their own and need to be complemented by significant investment in basic services such as water, health, transport, housing and education.

Cash transfer programmes focussing on child poverty have mostly been financed by loans or grants from international organisations, so far. Donors must consider continued support for child-targeted cash transfers as an important part of poverty reduction strategies to tackle child poverty effectively.

Programme for health education and nutrition

In 1997, the Mexican government introduced the Programme for Health, Education and Nutrition (PROGRESA), which pays a bundle of cash transfers to poor rural households with school aged children. This includes a monthly transfer for household consumption, additional transfers for every school-aged child, rising with each school grade and for girls. There is also an annual transfer for school materials such as books and uniforms. Transfers are conditional on children attending school for at least 85 percent of the school term and on mothers and infants accessing primary health care. The International Food Policy Research Institute’s evaluations of PROGRESA indicate that nutritional levels have improved in 70 percent of households, school enrolment rates have increased by 7 to 9 percent for girls and by 3 to 5 percent for boys and mothers reported a 12 percent lower incidence of illness in infants. By 2002, PROGRESA reached 40 percent of rural households in Mexico and its success in reducing poverty and impro

Source(s):
‘Child poverty and cash transfers’, Report 4, Childhood Poverty Research and Policy Centre, London, by A. Barrientos and J. DeJong, (2004) Full document.
‘Make Child Poverty History’, June 2005, id21 insights #56 Full document.

Funded by: Department for International Development, UK

id21 Research Highlight: 22 June 2005

Further Information:
Armando Barrientos
Institute for Development Policy and Management
University of Manchester
Oxford Road
Manchester M13 9QH, UK

Tel: +44 (0)161 275 2811
Contact the contributor: armando.barrientos@manchester.ac.uk

Institute for Development Policy and Management (IDPM), UK

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