By Claire Li (CMC ’19)
Brazil, one of the most unequal countries in terms of income distribution, is helping more than 11 million families and 46 million people get out of poverty.[1] In 2003, Brazilian President Lula formed the groundbreaking conditional cash transfer program Bolsa Familia (“Family Bag”) to assist the country’s low-income population. Because the eligibility for this program requires poor families to keep children in school and participate in regular health checks, the beneficiaries not only receive cash assistance but also accumulate human capital, which helps to end the cycle of poverty. The program has been a great success: economists say it has led to “Brazil’s quiet revolution.”[2] Policymakers worldwide are seeking to replicate the program’s success.
In most developing countries, the only requirement for cash transfer programs has simply been proof of low income. These programs are called “unconditional” cash transfer programs since they require no other commitments from poor families other than submitting an income report.[3] Unlike Bolsa Familia, these programs do not specifically target long-term poverty alleviation because they provide almost no incentive for beneficiary families to invest in their children and think in the long-term. Children between 6 and 15 years old need to pass at least 85% of the school year and 16 to 18 years old need to pass 75%. Households are required to follow a vaccination schedule and have their children’s growth and development checked regularly. Women between 14 and 44 years old also need to regularly monitor their health. Those who are pregnant are required to receive prenatal testing from local hospitals.[4] Eligible low-income families receive an average of R$70.00 (about US$35) per month via direct transfers.[5]
Under former President Lula’s effective implementation, Bolsa Familia significantly contributed to poverty alleviation. The program directly benefits nearly 46 million people, which is about ¼ of the population. The percent of people living below the national poverty line in Brazil has dropped from 24.9% (2003) to 7.4% (2014).[6] Bolsa Familia has also led to a 15% reduction in income inequality as it essentially redistributes income to the poor.[7]According to the Brazilian government, more than 96% of the children from beneficiary households satisfy the program requirements,[8] meaning that they now have both the incentive and the financial capability to access services like education and health care which are vital for their long-term development.
The implementation of conditional cash transfer (CCT) programs like Bolsa Familia is not without challenges. The government needs to correctly identify and reach the low-income families and carefully monitor the beneficiary families’ compliance with the education and health care requirements. It also needs to ensure that no corruption takes place in the process of the cash transfer. Nevertheless, the success of Bolsa Familia, as well as other CCT programs in Latin America, is showing the rest of the world that poverty assistance policies can go beyond merely identifying the poor and transferring money. Policies can be designed in a way that changes people’s behavior and accelerates social and economic change. It is likely that more conditional cash transfer programs like Brazil’s will be adopted by countries around the world to alleviate poverty and accelerate positive development.
[1] Wetzel, Deborah. “Bolsa Família: Brazil’s Quiet Revolution.” World Bank. N.p., 4 Nov. 2013. Web.
[2] Ibid.
[3] Koga, Kenya. “Pennies from Heaven.” The Economist. The Economist Newspaper, 26 Oct. 2013. Web.
[4] Bruha, Patrick. “Facts About Bolsa Família.” The Brazil Business. N.p., 24 Aug. 2014. Web. 06 Oct. 2016.
[5] “Bolsa Família: Changing the Lives of Millions in Brazil.” News & Broadcast – World Bank. N.p., n.d. Web.
[6] “Poverty & Equity.” Data. World Bank, n.d. Web.
[7] Wetzel, Deborah. “Bolsa Família: Brazil’s Quiet Revolution.” World Bank. N.p., 4 Nov. 2013. Web.
[8] Bruha, Patrick. “Facts About Bolsa Família.” The Brazil Business. N.p., 24 Aug. 2014. Web. 06 Oct. 2016.
