Second International Workshop on Conditional Cash Transfer (CCT) Programs. Workshop Proceedings

Transcription

1 Second International Workshop on Conditional Cash Transfer (CCT) Programs São Paulo, Brazil Workshop Proceedings The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent.

2 Second International Workshop on Conditional Cash Transfer (CCT) Programs São Paulo, Brazil The "Second International Workshop on Conditional Cash Transfer (CCT) Programs" was held in São Paulo, Brazil from April 26th-29th. Over 100 people participated from 25 countries, including almost all that have active or soon-to-be initiated CCT programs. The objective of this workshop was to bring together practitioners and policymakers from established CCT programs to share their experiences with one another, as well as with policymakers from countries currently setting up CCT programs. The workshop was a collaborative effort between the World Bank (the Social Protection Units of the Latin America and Caribbean Region, the Human Development Network and the World Bank Institute), the U.K.'s Department for International Development (DFID), the German Technical Agency for Technical Cooperation (GTZ), the International Food Policy Research Institute (IFPRI), Brazil's Bolsa Familia Program, and the Municipality of São Paulo. These brief proceedings summarize some of the oral discussion. They were compiled from notes taken by rapporteurs assigned to each session. Where available, the full versions of powerpoint presentations (in English, Spanish and Portuguese) and brief profiles of their program submitted by each country delegation (also in English, Spanish and Portuguese) provide a more complete source of information. They can be accessed on the internet at DRAFT VERSION 2

3 Table of Contents Page # Workshop Agenda. 3 Workshop Proceedings The Roles and Realities of Conditional Cash Transfers.. 9 The Impact of Conditional Cash Transfer Programs: A Review of Evaluation 13 Reaching the Poor: The Methodologies and Challenges of Poverty Targeting 18 Design of Proxy Means Testing Systems. 22 The Implementation of Proxy-Means Testing Systems.. 25 Reducing Errors of Exclusion: How to Ensure that the Poor Especially the Very Poor Gain Access to a Program. 29 Social and Political Effects of Targeting.. 31 Horizontal and Vertical Co-ordination 33 Co-ordination with Civil Society and the Private Sector. 35 Monitoring Conditionalities 38 Monitoring and Evaluation Systems.. 41 The Future Role of Conditional Cash Transfers. 43 Appendices Appendix I: Overview of Programs 48 Appendix II: List of Participants 56 DRAFT VERSION 3

4 Workshop Agenda * indicates presentations available at MONDAY, APRIL 26 8:30 am Welcome - Patrus Ananias de Sousa, Brazilian Minister of Social Development - Eduardo Suplicy, Federal Senator, São Paulo - Kjeld Aagaard Jakobsen, Municipal Secretary of Foreign Relations, Municipality of São Paulo - Madalena dos Santos, World Bank - Ernesto Jeger, United Kingdom Department for International Development (DFID) - Annette Backhaus, German Technical Cooperation (GTZ) - Michelle Adato, International Food Policy Research Institute (IFPRI) PANEL 1 The Roles and Realities of Conditional Cash Transfers Chair: Madalena dos Santos, World Bank 9:00 am Social development strategies to combat poverty, Eduardo Fagnani, University of Campinas-UNICAMP/Centro de Estudos Sindicais e de Economia de Trabalho-CESIT The Role of Conditional Cash Transfers in the Process of Equitable Economic Development, Francisco Ferreira, World Bank * 10:00 am Coffee Break 10:30 am Brazil s Bolsa Família Program, Ana Fonseca, Ministry of Social Development 12:00 pm Lunch São Paulo s Programa de Garantia de Renda Familiar Mínimia, Marcio Pochmann, Municipality of São Paulo * PANEL 2 Conditional Cash Transfer Programs and Social Safety Net Reform Chair: Miguel Angel Siman, El Salvador 2:00 pm Chile s Solidario System, Veronica Silva, Solidarity and Social Investment Fund (FOSIS), Chile * 3:00 pm Coffee Break Jamaica s Social Safety Net Reform Program, Claire Bernard, Planning Institute of Jamaica (PIOJ) * DRAFT VERSION 4

5 3:30 pm Colombia s Social Protection System: Background, Progress, and Challenges, Carmen Helena Vergara, Ministry of Social Protection, Colombia * Welfare Reform in the United States, Frank Fuentes, Administration for Children, Youth and Families, Department of Health and Human Services, United States * 4:30-6:30 pm CCT Marketplace and Cocktail TUESDAY, APRIL 27 PANEL 3 The Impact of Conditional Cash Transfer Programs: A Review of Evaluation Results Chair: Silvia Raw 9:00 am Impact Evaluation Objectives and Designs, Laura Rawlings, World Bank * The Impact of Conditional Cash Transfers on Poverty, Consumption, and Nutrition, John Maluccio, International Food Policy Research Institute (IFPRI) * 10:00 am Coffee Break 10:30 am The Impact of Conditional Cash Transfer Programs on Schooling and Health, Pedro Olinto, International Food Policy Research Institute (IFPRI) * Conditional Cash Transfer Programs, Community Participation, and Empowerment, Michelle Adato, International Food Policy Research Institute (IFPRI) * 11:30am- 8:00 pm Field Visit to Renda Minima Program (REGISTERED PARTICIPANTS ONLY, box lunch included) DRAFT VERSION 5

6 WEDNESDAY, APRIL 28 (REGISTERED PARTICIPANTS ONLY) PANEL 4 Reaching the Poor: The Methodologies and Challenges of Poverty Targeting Chair: Fadia Almasri 9:00 am The Targeting of Transfers: International Experience and Lessons, Margaret Grosh, World Bank * Household Targeting Systems: Lessons Learned from Latin America and the United States, Bénédicte de la Brière, United Kingdom for International Development (DFID) * 10:00 am Introduction to Parallel Working Sessions 10:30 am Coffee Break 11:00 am Parallel Working Session 1: Targeting Group 1: The design of proxy means testing systems (Spanish and Portuguese) Facilitator: Laura Rawlings, World Bank Theme: How to design the technical aspects of the proxy means testing formula Issues: How should the variables and their weights be determined? Should the same formula be used nationally, or modified for different regions or special groups? How should the cut-off score be set? Should geographic targeting be used as an adjunct and if so, how? Group 2: The implementation of proxy means testing systems (English and Spanish) Facilitator: Carlo del Ninno, World Bank Theme: How to most effectively register households Issues: How should the data on households be collected? In home visits or in office? On demand or periodic sweeps of target neighborhoods? On an ongoing basis or with a closed registry once an initial intake is done? By contractors or program staff? What are the costs and pros/cons of the different methods? Group 3: Reducing errors of exclusion (English and Spanish) Facilitator: Andrea Vermehren, World Bank Theme: How to ensure that the poor especially the poorest gain access to the program Issues: What do you do to encourage participation among the eligible poor/beneficiaries? What has worked well, what has not? What is your outreach budget? Who do you still miss, and how do you know/measure who you still miss? What would it take to reach them? DRAFT VERSION 6

7 Group 4: Social and political effects of targeting (English and Portuguese) Facilitator: Michelle Adato, International Food Policy Research Institute Theme: How to understand and manage the social and political effects of targeting Issues: What are the effects at the national level on support from the program? At the community level on cohesion among the community or changed roles (including gender) among those involved in the program? On individual self-perception and behaviors? What changes in the targeting system or its implementation might mitigate any problems? 1:00 pm Working groups report back to plenary 2:00 pm Lunch 3:00 pm Parallel Working Session 2: Implementation Group 1: Horizontal and vertical coordination (English and Spanish) Facilitator: Hideki Mori, World Bank Theme: How to achieve effective coordination on policy and program implementation horizontally (with ministries) and vertically (between national and local government)? Issues: a) Horizontal: What can be done to help ensure the supply of available, quality health and education services? How to communicate effectively to others about the program (regarding objectives, conditionalities, etc.); b) Vertical: What are the roles of national and local governments? What mechanisms exist for national-local government coordination? Group 2: Coordination with civil society and the private sector (Portuguese and Spanish) Facilitator: Bénédicte de la Brière, DFID Theme: What is the role of civil society and the private sector in CCT programs? Issues: How can civil society be involved at the community, municipal, and national level (targeting, appeals, board of CCT program, etc.)? How can the private sector be used effectively (payment mechanisms, audits, MIS, etc.)? Group 3: Monitoring conditionalities (English and Spanish) Facilitator: Azedine Ouerghi, World Bank Theme: How to ensure the effective monitoring of conditionalities? Issues: How to coordinate with line ministries and their service providers (schools, health centers) to ensure cooperation? How to develop and administer good management information systems for tracking compliance? What to do when beneficiaries are not complying with conditionalities? Group 4: Monitoring and evaluation systems (English and Portuguese) Facilitator: Laura Rawlings, World Bank Theme: What are the best approaches to monitoring and evaluating program performance? Issues: What are the best key performance indicators? How can the use of M&E results be ensured? What objectives and options exist in the use of evaluations? What are the key topics for future evaluations? 5:00 pm Working groups report back to plenary DRAFT VERSION 7

8 THURSDAY, APRIL 29 (REGISTERED PARTICIPANTS ONLY) 9:00 am Parallel Working Session 3: Emerging Challenges Group 1: Complementary programs, emancipation efforts, program graduation (Spanish and Portuguese) Facilitator: Hideki Mori, World Bank Theme: How do you ensure coordination with other programs? Issues: Which measures/programs are complementary to CCT programs? What is the CCT program s exit strategy? How do you manage the graduation of beneficiaries? What is the role of case workers? Are they necessary? Are there any other mechanisms to encourage emancipation from the program? Group 2: Scaling up (Spanish and English) Facilitator: Carlo del Ninno, World Bank Theme: How do you scale up CCT programs? Issues: What is needed to scale up programs? What can be potential difficulties in scaling up? What do you have to do differently when scaling up? Are there differences between scaling up in urban and rural areas? Group 3: Role of CCTs in crisis situations (Spanish and English) Facilitator: Azedine Ouerghi, World Bank Theme: What has been the role of CCTs in crisis situations? Issues: How can CCT programs be useful in crisis situations? What can they do, what are their limits? Which elements of CCT programs need to be adjusted in crisis situations? Can CCT programs be counter-cyclical crisis response mechanisms? Group 4: Special target groups (English and Portuguese) Facilitator: Andrea Vermehren, World Bank Theme: Are CCT programs appropriate mechanisms to reach and attend the needs of special target groups (indigenous, disabled, elderly, etc.)? Issues: Which special target groups have been included in CCT programs so far? What are the particular challenges of reaching these groups? What arrangements are needed for reaching these groups (outreach, modification of conditions, etc.)? 11:00 am Working groups report back to plenary 12:00 pm Lunch PANEL 5 The Future Role of Conditional Cash Transfer Programs 2:00 pm Discussion of key issues facing conditional cash transfer programs 3:30 pm Coffee Break 4:00 pm Debate 5:00 pm Closing remarks and evaluation of workshop DRAFT VERSION 8

9 Proceedings Introductory Session (Panel 1): The Roles and Realities of Conditional Cash Transfers Monday, April 26, am The Role of Conditional Cash Transfers in the Process of Equitable Economic Development by Francisco Ferreira, The World Bank and Department of Economics, PUC-Rio 1 Developing regions tend to have a huge level of inequality. Latin America is a high inequality region, as is Africa. There are exceptions, however, such as Uruguay which has less inequality than industrialized countries. In Brazil, inequality is very high. Why is inequality important? There are two main reasons: 1. Inequality is widely repudiated in its own right. People don t like to live with inequality. Results from a poll showed that more than 80% of people felt that the income distribution is very unfair. The vast majority believes that we live in an unfair society. 2. From an economic perspective, inequality can slow poverty reduction and may generate conflict and reduce investment, thereby reducing a country s growth levels. Public spending in Less Developed Countries (LDCs) is rarely effective in reducing inequality. There is a great diversity, from very progressive to very regressive. A cross-country correlation between inequality and spending on primary education can be observed, showing that greater inequality in income generally accompanies lower spending on primary education, though it is difficult to identify causality in this relationship. In Brazil in 1997, some of the largest expenditure categories were very regressive (i.e., only a small fraction reached the poor). The ideal solution is to transfer part of the money in a regressive program to a progressive program. The concentration coefficients for public expenditure categories in Mexico show that Progresa is a very progressive CCT program, compared to pensions and electricity or milk subsidies. CCT: A building block for a more effective state?? 1. Cash benefits can be targeted on the basis of a means test. (The best practice is a verified proxy means test.) 2. The transfer can be made conditional on human capital investments (e.g., nutrition, health, education). (The best practice is integrated conditionality.) 1 For more information, see the presentation online at DRAFT VERSION 9

10 3. Such CCTs have become widespread in Latin America and elsewhere. Examples include Opportunidades (Mexico), PRAF (Honduras), RPS (Nicaragua), Bolsa Familia (Brazil), Bono de Desarrollo Humano (Ecuador) and cash for education in Bangladesh. Three positive characteristics of these programs 1. Incidence: CCTs really do reach the poor. 2. Beneficiaries seem to increase investment in their human capital. Estimates for Mexico s Progresa indicate that, for example, boys and girls enrollment in middle school rose, child labor-force participation fell, nutritional outcomes improved, and the incidence of illness among newborns declined among those who received benefits (relative to those who did not receive benefits). 3. The benefits were achieved at reasonably low costs. Expenditures ranged from less than 1% to about 4% of public expenditure. All were less than 0.2% of gross national income (GNI). The challenge for CCT: Complacency is to be avoided 1. Entry: Effective targeting through geographic targeting, proxy-means targeting, and verification visits) allows transfers to rise without excessive leakage. 2. Exit: Exit rules need to be clearly defined in order for conditionality to remain credible. For a CCT to be effective and to avoid criticism of the program there must be a steady flow of exits as, for example, households fail to meet the program s conditions. A culture of dependency must be avoided. 3. Conditionality does matter. Simulations of the impacts of Brazil s Bolsa Escola program suggest that little impact on educational attendance would be achieved without the cash transfers being conditional. 4. A credible evaluation helps to ensure continuity across political cycles and can improve program design. It requires meaningful comparisons and that should be included in a program s design: simply comparing participants situations before and after, or the circumstances of participants relative to non-participants is not acceptable. Social Development Strategies to Combat Poverty by Eduardo Fagnani, professor of economies, University of Campinas-UNICAMP/Centro de Estudios y de Economía de Trabajo CESIT Prof. Fagnani did not agree with all of Mr. Ferreira s points. In particular, he felt social expenditures in Brazil were not high, compared to those of other countries, and especially when allowing for differences in what are included as social expenditures. Education is not a panacea for economic development: you need growth. Targeted programs are not enough to reduce poverty and social inequalities. In the recently released World Bank report, the only country that will reduce its poverty is China and that is because it is growing by 8 to 10% per year since the 1990s. In contrast, the absolute number of poor in Latin America will be more or less stable until 2015: this should not be accepted as a consensus or a given. DRAFT VERSION 10

11 What would be the elements of a poverty-fighting strategy for developing countries? 1. There is a need to improve CCTs. There is typically fragmentation of actions and clienteles, and so there is a need for the formulation of national policies. An exit strategy is also important: How can we leave a program of this type? In Brazil, a single health system implies co-funding by three levels of government. This could also be used as a model for co-operation. 2. Social development strategy cannot be supported only by CCT programs. Poverty lines are subjective: one can have more or less poor people depending on the poverty line that is used. In Brazil, there are between 20 million and 57 million poor people, depending on the criteria. If the poverty line is one-quarter of the minimum wage, then 8.4% of Brazilians are poor; if it is less than the minimum wage, then 50% of Brazilians are poor. Is it worthwhile to target when poverty levels are so high (e.g. in northeast Brazil)? 3. CCTs must be seen as part of a broader strategy. There is a need for some universal policies. For example, classical policies such as public health and social security may need to be universal. As well, policies connected to urban infrastructure may also be required. Brazil s Administrative Reform by Ana Fonseca, Executive Secretary, Ministry of Social Development, Brazil There is a history of social assistance programs in Brazil e.g., scholarship program, food allowance, income allowance. Each program had its own conditionality. There was stiff competition among programs and there was superposition and overlapping of programs; some families received benefits from more than one program. There was a lack of cooperation. There are only two or three examples of good cooperation in Brazil. One is municipality of São Paulo (of which, more later). There has also been a history of segmentation of target groups - lots of waste in middle activities, administrative inefficiency. This made it difficult to have a very transparent social policy as there were many different entry doors to these programs. In September of 2001 the federal government created a single registry system for programs. In November of 2002, an analysis of the databases showed that there were more people registered (540 million) than total number of Brazilians. There were important changes in the new administration 1. Benefits were received by family groups, facilitating record keeping. 2. Decentralization of the registry. In past, municipalities had no access to the Registry and so could not plan policies based on the same information. 3. There are integrated interventions in health and education. There is intergovernmental federal, state and municipal cooperation. DRAFT VERSION 11

12 4. CCTs are now part of a consistent, national strategy to fight poverty and include many different actors. 5. Family groups have access to other types of programs. This fosters local development in specific areas. The main challenges are to: define clear exit paths from the programs; have different strategies for larger and smaller municipalities; and develop more efficient mechanisms for social controls. São Paulo s Garantia de Renda Familiar Mínima by Marcio Pochmann, Municipality de São Paulo and professor, University of Campinas-UNICAMP 2 São Paulo is the third largest demographic concentration worldwide. It accounts for 15% of Brazil s GDP, and yet has had 25 years of no economic growth. In the 1990s, six of every 10 jobs in industry were in São Paulo; now the share is less than 20%. There has been a universalization of poverty. Since 1990, unemployment has been one of the major factors of exclusion. In March, there were 100,000 people in São Paulo with college degree and yet unemployed. There have been several innovations in the city s approach to social programs: public management centralized as state programs with participation at board level; an emphasis on those areas of concentrated poverty, high levels of violence; and education levels were used to create a map of social exclusion focused first on those districts with the highest exclusion. The strategy of social inclusion consists of three components: Start with redistributive programs that give cash. São Paulo has four CCT programs, including the minimum family income assurance program the largest program with 204,000 families where cash transfer is conditional on going back to school; emancipation programs citizenship, training and apprenticeship, and local lending; and local development support programs which emphasize (a) empowerment and inclusion for workers, and (b) intervention with businesses to use workers that have received training. These programs have had an impact. More than 80% of expenditures are carried out at the neighborhood level. Tax collections have increased. And there has been a reduction of violence. 2 For more information, see the presentation online at DRAFT VERSION 12

13 The Impact of Conditional Cash Transfer Programs: A Review of Evaluation Results (Panel 3) Tuesday, April 27, am The objectives of the panel are to: present a general overview of impact evaluation processes, its main objectives and some features about design, methods, and planning, in the case of CCT; and review the most relevant findings of impacts of CCT programs on nutrition, education and health services, and community participation and empowerment. Impact Evaluation Objectives and Designs by Laura Rawlings, Latin America and Caribbean Human Development Department, World Bank 3 An impact evaluation is a selected and periodical process to assess changes in well being attributable to a particular intervention. Accordingly, an impact evaluation seeks to determine whether a set of indicators changed and, if so, how much and to what extent such changes are attributable to the evaluated program. Impact evaluation is a component of a Monitoring and Evaluation plan, in which monitoring is an ongoing not an optional activity to measure goods and services generated. Impact evaluation is different from monitoring, however, as not all programs require an impact evaluation. Usually, an impact evaluation is required when an intervention is innovative, replicable, and strategically relevant for reducing poverty. Also, an impact evaluation is a useful tool to fill knowledge gaps and to offer governments information for future decision-making and policy formulation. To answer the question about what beneficiaries lives would have been like without the program, the design of an impact evaluation should establish a control or comparison group (i.e., comprising people who do not participate in the program) to compare with treatment group (i.e., those who do participate). Selecting non-participants is a key issue affecting the overall results of an impact evaluation. It can be done either through experimental or quasi-experimental designs. The experimental method is based on the randomly assignment of communities into treatment and control groups during project design. Quasi-experimental designs tend to replicate experimental evaluation by comparing same groups before and after the intervention. Thus a comparison group has to be constructed. The quantitative results of an impact evaluation are usually combined with qualitative methods to identify beneficiary perception and context, as well as to achieve an in-depth and nuanced interpretation of findings. 3 For more information, see the presentation online at DRAFT VERSION 13

14 Planning an impact evaluation is a process that should start as early as possible during program design to properly determine objectives (i.e., the key questions to be answered), methodology, timeframe, cost, financing, and institutional arrangements (meaning, for the most part, coordination with the project cycle). CCT programs comprise most of the general features that make impact evaluations useful for future policy making. CCT programs are innovative, replicable at national and international levels, and strategically relevant for reducing poverty. Moreover, recent evaluations of CCT interventions have helped to improve knowledge about their effectiveness compared with other programs intended to reach similar objective, and have offered policy makers information to make decisions based on more structured criteria. The main results discussed here are based on CCT programs in Brazil (Bolsa Alimentação), Colombia (Familias en Acción), México (Progresa/Oportunidades), Honduras (PRAF phase II), and Nicaragua (Red de Protección Social). They share the overall objective of long-term poverty alleviation through an investment in human-capital formation (e.g. education, nutrition, and health) through short-term intervention. The first generation of CCT programs based their impact evaluations on experimental designs (Mexico, Honduras and Nicaragua). A second generation has evaluated their programs on quasi-experimental methods (Colombia, Brazil). General results from evaluations show that reducing current expenditure-based poverty largely depends upon: the size of the transfer to affect beneficiary behavior in Colombia, Mexico and Nicaragua, the transfer is equivalent to 18% to 26% as a proportion of household expenditures; the size of the overall budget to increase the number of beneficiaries (from 10,000 in Nicaragua to 2.6 million in Mexico); and how well the program is targeted. The Impact of Conditional Cash Transfers on Poverty, Consumption and Nutrition by John Maluccio, International Food Policy Research Institute (IFPRI) 4 The results, based on programs in Brazil, Mexico, Honduras and Nicaragua, suggest significant impacts of the CCT programs on nutrition. The impacts on food expenditure are significant, except for Honduras (probably because of the small size of the transfer). The Mexico evaluation indicates that the probability of increasing consumption is higher in the treatment group. In all cases, there is evidence that households in the treatment group not only increase the number of food items purchased but that those items are nutritionally better. In all cases, except for Honduras, the impact of the program in reducing the prevalence of stunting is significant (from -1.9 in Brazil to -9.9 in Mexico). 4 For more information, see the presentation online at DRAFT VERSION 14

15 Reducing prevalence of underweight is also significant: -1.7 from a baseline of 14.9 in Brazil; and: -6.0 from a baseline of 16.4 in Nicaragua). The Impact of Conditional Cash Transfer Programs on Schooling and Health by Pedro Olinto, International Food Policy Research Institute (IFPRI) 5 CCT programs can (i) create incentives for improving quality of and attendance at education and health services, and (ii) relieve demand-side constraints (because demand constrains access to social services as importantly as supply shortages). For education programs, most CCTs involve educational grants and monetary support for the acquisition of school materials and supplies. Some programs also involve supply side interventions to improve schools and quality of education, combining supply- and demand- side incentives. Improvement in primary enrollment is significant only in those countries with initially low rates (i.e., a rise in Nicaragua from 75% to 93%). In Mexico and Colombia, enrollment rates are high (94%) and there is no significant impact; in Honduras enrollment is 82%, but improvement is not significant. Improvement in secondary enrollment is significant in Mexico (70% to 78%) and Colombia (64% to 77%). In Mexico, the impact on improving transition from primary to secondary is significant (58% to 67%). Improvement of school efficiency is also significant: CCT programs contribute to reduced grade repetition (in Mexico from 37% to 33%, and Honduras from 18% to 13%) and lower drop-out rates (in Mexico from 13% to 9%, in Nicaragua from 7% to 2%, and in Honduras from 9% to 5%). In general, there is improvement in grade attainment and primary completion. For health-related CCT programs, the results show that: PROGRESA (Mexico) improved growth monitoring visits (0.182 percentage points) and reducing illness rates (-0.044). Nicaragua s RPS improved children visits to health centers (from 76% to 95.5%) and weight control of children younger than 3 years of age in health centers (from 62.6% to 91.5%) In Honduras, the impact of PRAF shows improvements in pre-natal care visits, the share of children younger than three years of age taken to health centers and weighed, and DPT1 vaccination. The program, however, seems to have increased the proportion of pregnant women aged 12 to 49 years of age. In Brazil there are improvements in the proportion of mothers having pre-natal controls, and in the share of children taken to the health center. There are some additional conclusions from the impact evaluations of CCTs on health and education: For maximum human-capital impacts, government needs to ensure that the quality of health and education services is adequate to meet the potentially higher demand 5 For more information, see the presentation online at DRAFT VERSION 15

16 triggered by a CCT program, and that macroeconomic policies are conducive to create opportunities to absorb skilled individuals. Results about combined supply- and demand- side interventions (e.g., Honduras) require further study and, as a result, are not conclusive. Finally, evaluation (both ex-ante and ex-post) is of crucial importance in order to identify and promote interventions which were proven to be effective in the reduction of poverty. Conditional Cash Transfer Programs, Community Participation, and Empowerment by Michelle Adato, International Food Policy Research Institute (IFPRI) 6 The importance of community participation stems from the need to: promote the poor as informed participants in development assistance, correct problems of top-down approaches, reduce information problems in determining priorities and targeting, build institutions and capabilities for the poor to act collectively in their own interest, and increase sustainability of interventions. The main areas for community participation include targeting, the liaison between the program and its beneficiaries, the monitoring of program implementation, and the management of supply of services. Most programs have involved community participation since the early stages of design e.g., involving local authorities, organized groups of beneficiaries, liaison officers (promotoras) and volunteer groups through workshops and the like. The main findings from Mexico and Nicaragua reveal: Little community participation through organized groups in improving or reviewing targeting, and little understanding of the reasons for inclusion or exclusion. The population does not understand the process, so they live in fear of losing benefits, which undermines the aim of empowerment. Community participation in targeting would increase sense of ownership of program. The liaison officer (promotora) is usually elected and is good in holding meetings and providing information to beneficiaries on program requirements. However, she/he does not regularly communicate problems, grievances or ideas to program management and officials. Training is poor and needs to be improved. CCT programs promote informal community organization among beneficiaries. Such organization largely depends on initiative of the promotora or doctors and usually depends on pre-existing community organizations. 6 For more information, see the presentation online at DRAFT VERSION 16

17 Recommendations include: Improve provisions for increased participation in targeting; Improve local understanding of CCT programs to increase ownership; Improve quality of health training and other beneficiary forums to promote learning; and Improve training of liaison officers. DRAFT VERSION 17

18 Reaching the poor: The methodologies and challenges of poverty targeting (Panel 4) Wednesday, April 28, 2004, 9am Chair: Fadia Almasri In resource-constrained economies, there is a need to target to balance the human right to a dignified life with limited resources. The Targeting of Transfers: International Experience and Lessons presented by Margaret Grosh, World Bank. Her remarks were a synopsis of a paper by her, David Coady and John Hoddinott. 7 There are some key questions with targeting: What works? What are the targeting outcomes observed in practice? Are there systematic differences across targeting methods or program types or country type? What, in practice, are the implications for design and implementation of targeted interventions? The study used a new database of 122 programs from 48 developing countries (client countries of the World Bank). It reviewed all the literature, case studies, etc. that they could find. It evaluated targeting performance using a meta analysis (as the studies did not have consistent methodology). To define a single indicator, the study used: per cent of benefits / per cent of population. If, for example, 60 per cent of benefits go to poorest 40 per cent of the population, then the score is 1.5. Higher scores are better. The study focused on and reported the share of benefits going to the poorest 40 per cent (or the closest to that they could find for each study). Varied targeting methods were used in the studies assessed: Individual assessment (means, proxy means, community-based): Some sort of program official must assess households, so this is typically the most resource-intensive, though that can vary if, for example, the assessment is done in a central office as opposed to on-the-doorstep. Community-based targeting assumes someone in community with good local knowledge not principally related to the program makes or helps make the decisions. Categorical/group (geographic, demographic, other) Self-selection (e.g., by purchase of commodity, work requirement, community bidding). In case of community bidding, it is usually put forward by the community and involves some form of public good. There are several caveats to the analysis. There is a possible bias in the sample of programs the study tried to be complete but likely undersampled community-based selection methods. The measure is a static one and so does not account for entry or exit. It is essentially a limited measure that assesses errors of inclusion but not of exclusion, so the study only looked at one aspect of targeting. And, of course, targeting is only one 7 For more information, see the presentation online at The paper provides more details and is available at It will be translated into Spanish and Russian soon. DRAFT VERSION 18

19 aspect of a program: a program can t be judged solely on the basis of its targeting success. The study s results report typically higher scores for more complex approaches, but there is a lot of variation within each typology as well (i.e., 80 per cent of the variation is within targeting categories). The study s statistical analysis lead to five messages: 1. Targeting can work: the mean value for the indicator was 1.25, and the top ten programs (in terms of the indicator) ranged from two to four (with a wide range of circumstances and approaches). In other words, the most successful targeting results show that the poor received two to four times more than their per-capita share of benefits. 2. Targeting doesn t always work: one-quarter of the programs reviewed were regressive. 3. There is no clearly preferred method applicable for all purposes and contexts. 4. Context and implementation matter a lot 5. Nevertheless, a weak ranking emerged. In the order of better to weaker: a) Means, geographic, work requirement are the most reliable methods. b) Proxy means, community based, demographic to kids (good medians but a lot of variation). There was some surprise that proxy means had such wide variation, but that may be in part because the study did not include the later studies (presented at this conference). With more evidence, it is expected that these methods will move up in the ranking. c) Demographic targeting to elderly, community bidding, self-selection of commodities. These had low potential for good targeting. The implications are: Perfect the implementation of whatever targeting mechanism is used. It is an art to match the mechanism to the context. The trick is to implement it well. Implementing Household Targeting Systems: Lessons from Latin America and Caribbean and the United States presented by Kathy Lindert, World Bank, and Bénédicte de la Brière 8, DFID The existing literature mainly covers outcomes of targeting, rather than how to do it. The underlying paper for this presentation explains in more detail the nuts and bolts of targeting mechanisms in a variety of settings (U.S., Brazil, Chile, Colombia, Costa Rica and Mexico). This presentation described the main findings. The report will be completed soon and then available on the World Bank website. The main types of targeting systems are: Verified means testing (VMT) of incomes, assets and/or consumption, currently used in the U.S. Unverified means testing (UMT), currently used in Brazil. 8 For more information, the presentation is available online at DRAFT VERSION 19

20 Proxy-means testing (PMT) using observable variables, reflects the idea that poverty is not only an income problem there are all sorts of in-kind revenues that are hard to transfer. PMT is done in all the other countries in the study. Community-based targeting (not reviewed here) Self-targeting (not reviewed here) No single blueprint works best in all situations. Countries have experimented with different methods at all levels and with different approaches. Across countries, the access process differs (e.g., on-demand in U.S. and Chile, by surveys elsewhere). Most countries had a national database except U.S. and Colombia the latter is building one, former admits not having one was a problem. The study used the following evaluation principles for judging good practice: Transparency and consistency - individuals and program managers understand the system well Maximum inclusion (coverage) of poor to achieve poverty focus one way to get this is universal and on-going access Minimize leakage to the non-poor Cost efficiency The issues for designing a system can be listed under seven headings. 1) What type of means testing mechanism? VMT is strong but costly and difficult to implement. In particular, it requires automated information systems. UMT is poor at reaching the poor. Many measurement errors and incentives for underreporting there is evidence of this happening in Brazil. In the U.S., error rates doubled when they moved to UMT. PMT is promising in Latin America. It involves interviewing the household and/or performing a household visit. Most countries use around 10 questions for the proxy means testing. Of course, it is more burdensome than geographic targeting, but since you have to get to the household to get them in the program, the marginal cost is not that large typically, $2 to $8 for interview costs. 2) How to register them? This matters a lot, as it is the first point of contact with the beneficiary. The two main methods are survey approach or application approach. Registration of beneficiaries using the survey approach means that potential beneficiaries are contacted to determine eligibility for the benefit and subsequently registered as beneficiaries. When using the application approach, it is left to potential beneficiaries to contact the program and apply for the benefit, before the determination of their eligibility allows them to be registered. The advantages of survey approach is that it has a higher chance of reaching the poorest who may be least informed and therefore may not otherwise apply. The marginal costs are small but total costs may be higher than with application process. Application may make sense in more heterogeneous areas, particularly when supplemented with special outreach activities to target particular groups, and in areas of moderate to low poverty levels. DRAFT VERSION 20

21 3) When to update and re-certify. Regular updating is required for changes in household composition and address or location, and to capture major changes in economic circumstances. In situations of chronic poverty as opposed to transient poverty re-certification may be required less frequently. In the U.S., re-certification is annual but in Latin American and Caribbean countries, it tends to be less frequent. 4) How perform audits, cross-checks, and quality control? These are needed for all three types of targeting systems. Easier both for officials and for beneficiaries if there is a strong legal framework to impose penalties for fraud. 5) Is the information system designed to be a management tool? The message is strategy first, technology second. The key focus should be the information needed to manage the program. 6) Are institutional roles clearly defined? There are advantages to both centralized and decentralized administration. Decentralized administration encourages involvement of local officials and the poor themselves. Centralized administration may have better data quality and lower costs (due to economies of scale), but it is pretty incompatible with on-demand application. 7) How to implement transition? Recognize that it takes time, so it is important to proceed in steps. Remember, however, that if the implementation is too slow it won t be complete when the next change comes. DRAFT VERSION 21

22 Design of Proxy Means Testing Systems Workshop 1, Group 1 Wednesday, April 28, am In designing the technical aspects of proxy means testing (PMT) formula, how should the variables and their weights be determined? Should the same formula be used nationwide or should it be modified for different regions or special groups? How should the cut-off score be set? Should geographic targeting be used as an adjunct and, if so, how? Three case studies were presented to start the discussion. Nicaragua 9 The program (RPS) is in its second phase. IFPRI helped in the evaluation of the first phase and in the PMT targeting design. Targeting came in two stages: first, there was geographic targeting by high incidence of poverty (Comarca Censales), and, second, within Comarca Censales, households were selected by PMT methods (proposed by IFPRI). To select proxy variables (good predictors of per capita expenditures) and determine weights for each proxy variable selected, the Encuesta de Nivel de vida 1998 was used. Variables were selected that are in the registration form of the program. (Other variables not in the registration, but that predict per capita spending well, were considered for future adjustment of registration forms.) There was a focus on variables that are not easy for the households to affect (to prevent manipulation by households) and variables that are easy to verify (e.g., walls, roof, floor, water and swage system). Variables included household population, age, number of adults, education and household facilities (e.g., latrine, durable goods, ceiling). Using the data, it was possible to make a per-capita expenditure for each household. The cut-off point was the extreme poverty limit. The result was that 75 per cent of the registrants were selected for the program. Nicaragua is studying the social effects PMT targeting versus geographic targeting. Dominican Republic 10 The selection system was developed in 1997, first with a poverty map and then, within a geographic area, with an individual selection system. A multi-dimensional indicator (indice de calidad de vida, ICV) was used of poverty and not just income. The ICV includes variables known to be correlated with poverty in Latin American and Caribbean countries: Variables included must be in the census 15 variables used Weight of each variable came from regression analysis Only one formula was used for all geographic areas 9 Presented by Alejandro Sánchez, Director General del Programa Red de Protección Social, Ministerio de la Familia, Nicaragua. 10 Presented by Antonio Morillo DRAFT VERSION 22

23 Scale to each family Cluster analysis and extreme-poverty line for urban and rural areas Four categories: extreme poor, poor, middle class and upper class Model estimates the number of homes, their densities and priority (and nonpriority) areas São Paulo 11 There are 500,000 families in the São Paulo municipal area which are living below the poverty line, roughly 20 per cent of the population of 10 million people. Currently, 220,000 families are in the program. The first step was to prioritize areas (i.e., geographic targeting). The poverty pockets in periphery areas (96 districts) were targeted first. Several indicators were used for targeting areas: per cent in poverty, illiteracy rate, schooling achievement rates, crime rates, and high concentration of children and young (objective of the program). Ranking the districts, 100,000 people were selected for the first year. As part of the registration, Cadastro ( I Register ) asks for income. There is an ouvidoria, a hotline, to receive complaints about selections. If one family is denounced, a survey of the area is done. The fraud rate (i.e., inclusion error) is about 2.8 per cent. Liars must leave the program. A major problem with Cadastro is that it takes time. Another is that people didn t know that the Cadastro exists or doubted that they would receive anything from the program. Challenges The three case studies indicated several challenges: Nicaragua: How to improve model? How to minimize exclusion rates? How to establish poverty line? How to establish a continuously updateable system (demand driven)? Dominican Republic: The need to develop an adequate model and to identify relevant variables associated with poverty (from more recent and comprehensive household sample surveys); The new census data (need to include the variables identified above in the model) must be applied to it; and A new poverty map using new census and proxy variables São Paulo: How to include more people? How to exclude those who eventually get jobs? How to have a system to continuously include people? 11 Presented by Tiago Ribeiro of the Municipality of Sào Paulo DRAFT VERSION 23

24 Solutions Nicaragua: Continuously revise the current method with frequent evaluations Evaluate social impact of excluding a few families within communities Dominican Republic: Perform sensitivity analysis Obtain new household survey and improve statistical predictive models Validation in the field General Discussion The discussion was wide-ranging, with many reporting challenges in their programs: With a high illiteracy rate 56% of population in Mozambique it is difficult to implement these programs Is it possible to combine absolute and relative poverty in the poverty indicators? The fraud levels seem very low in São Paulo. That is because there are clear areas of poverty in São Paulo and there are random verification visits One suggestion was to take into account that PMT may include errors, and so the cut-off point should be raised to reduce the exclusion errors. The rich can be identified later. There is a genuine problem (as mentioned in Michelle Adato s presentation 12 in the evaluation session) when a family does not understand why a neighbor is granted benefits, but they aren t. The program in Paraguay is still in the design phase. The first phase is geographic targeting. Second stage includes questionnaires distributed to 9 th grade to obtain information on 25 variables (e.g., education of parents, home characteristics). The target of program is not necessarily the very poor; instead the aim is keep children staying in secondary school. Some questioned the PMT, when the target variable (i.e., consumption or income) is unclear and perhaps non-observable. Others noted that, while all models have their faults, the PMT at least comes close to getting benefits to the right people. It is probably best to use several sources of targeting (i.e., geographic, PMT, etc.). Moreover it is important to evaluate the targeting with local information local via qualitative methods. What s next? 12 DRAFT VERSION 24