Analyzing conditional cash transfer programs

The emergence of Conditional Cash Transfer (CCT) programs in the 1990s has marked the shifting in poverty alleviation strategy globally from a state-centered to people-centered strategy. Directing cash benefits to the targeted households with certain conditionality through CCT programs is considered as an effective means in combating poverty and inequality since CCT programs are equipped with redistributive character. This paper attempts to (1) identify the features of CCT programs so that they become a social policy instrument which effectively reduces inequality and alleviates poverty, and (2) identify the circumstances needed to make CCT programs become more successful. By examining Brazil’s practical experience in implementing Bolsa Familia, this paper argues that CCT programs are an effective means in combating poverty and reducing inequality because of: (1) their ability to better target the beneficiaries, and (2) their ability to affect the behavior of the beneficiaries. In addition, to be more successful, implementation of CCTs presupposes a good administrative capacity, an adequate supply side policy, and a well-defined exit rule