The Economist has a fascinating new approach to fighting poverty that has worked well in Latin America and now is being used in New York:
MENTION globalisation and most people think of goods heading across the world from East to West and dollars moving in the other direction. Yet globalisation works for ideas too. Take Brazil’s Bolsa Família (“Family Fund”) anti-poverty scheme, the largest of its kind in the world. Known in development jargon as a “conditional cash transfer” programme, it was modelled partly on a similar scheme in Mexico. After being tested on a vast scale in several Latin American countries, a refined version was recently implemented in New York City in an attempt to improve opportunities for children from poor families. Brazilian officials were in Cairo this week to help Egyptian officials set up a similar scheme. “Governments all over the world are looking at this programme,” says Kathy Lindert of the World Bank’s office in Brasília, who is about to begin work on similar schemes for Eastern Europe.
Bolsa Família works as follows. Where a family earns less than 120 reais ($68) per head per month, mothers are paid a benefit of up to 95 reais on condition that their children go to school and take part in government vaccination programmes. Municipal governments do much of the collection of data on eligibility and compliance, but payments are made by the federal government. Each beneficiary receives a debit card which is charged up every month, unless the recipient has not met the necessary conditions, in which case (and after a couple of warnings) the payment is suspended. Some 11m families now receive the benefit, equivalent to a quarter of Brazil’s population.
In the north-eastern state of Alagoas, one of Brazil’s poorest, over half of families get Bolsa Família. Most of the rest receive a state pension. “It’s like Sweden with sunshine,” says Cícero Péricles de Carvalho, an economist at the Federal University of Alagoas. Up to a point. Some 70% of the population in Alagoas is either illiterate or did not complete first grade at school. Life expectancy at birth is 66, six years below the average for Brazil. “In terms of human development,” says Sérgio Moreira, the planning minister in the state government, “Alagoas is closer to Mozambique than to parts of Brazil.”
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As well as providing immediate help to the poor, Bolsa Família aims in the long run to break this culture of dependency by ensuring that children get a better education than their parents. There are some encouraging signs. School attendance has risen in Alagoas, as it has across the country, thanks in part to Bolsa Família and to an earlier programme called Bolsa Escola.
The scheme has also helped to push the rate of economic growth in the poor north-east above the national average. This has helped to reduce income inequality in Brazil. Although only 30% of Alagoas’s labour force of 1.3m has a formal job, more than 1.5m of its people had a mobile phone last year. “The poor are living Chinese rates of growth,” says Aloizio Mercadante, a senator for São Paulo state, repeating a proud boast of the governing Workers’ Party.
Look hard enough and it is also possible to find businesses spawned by this consumption boom among the poor. Pedro dos Santos and his wife Dayse started a soap factory with 20 reais at their home in an improvised neighbourhood on the edge of Maceió, the state capital. With the help of a microcredit bank, they have increased daily output to 2,000 bars of crumbly soap the colour of Dijon mustard. Nearby, another beneficiary of a microfinance scheme has opened a shop selling beer, crisps (potato chips) and sweets.
Read it all here.
What do you think?