Malawi’s small scale traders selling their merchandise at Limbe market in Blantyre. Credit: Lameck Masina/IPS

By Lameck Masina
BLANTYRE, Malawi, Jun 11 2020 (IPS)

Malawi remains one of the few nations in the world that has not gone into a coronavirus lockdown as the government rushes to meet the conditions of a court order to implement a cash transfer scheme for the poor before doing so. But as some parts of the world are slowing coming out of their lockdowns, it could be likely this southern African nation won’t go into one as the rerun of the country’s presidential election nears. 

On Apr. 27, President Peter Mutharika announced the roll out of a multimillion dollar emergency cash transfer exercise aimed to cushion the peri urban poor from the impact of the coronavirus.

Mutharika said the $51 million bailout initiative targeted 172,000 households in the cities of Lilongwe, Blantyre, Mzuzu and Zomba.

The exercise, which was expected to roll out in May, was in response to demands from civil rights organisations, who obtained a court injunction against a planned 21-day lockdown scheduled to start Apr. 18, outlining the lack of measures to cushion the country’s vulnerable. The court ruled the cash transfer scheme be implemented and a lockdown would be suspended until then.

Under the World Bank-funded programme, beneficiaries will receive MK35, 000 (about $47) a month, for six months.

Country’s vulnerable still waiting

Widow Elizabeth Longwe has been earning her daily income by selling tomatoes at Limbe market in Blantyre. But since the country confirmed its first case of coronavirus on Apr. 2, her daily sales have reduced by almost half.

Her customers stopped purchasing from her for fear of contracting the virus, which has killed over 400,000 people across the globe.

“Instead, people started buying things in bulk and using them sparingly, making it difficult for small scale businesses like mine to enjoy the same kind of sales one would do on a normal day,” she tells IPS.

The mother of three says she “thanks God” that her lack of sales came after the government suspended schools in response to the pandemic.

“It would have been a disaster to me because I couldn’t have managed to provide transport money for my two older children to school daily. But still, my worry was how I would manage to feed my children,” she says.

But she had been hopeful for financial assistance when the cash transfer scheme was been announced.

So too was Lackson Tembo, who trades in second-hand clothes, also at Limbe Market.

“This was a relief to me because with this meant I would still be feeding my children. I would be able to buy soap for washing and bathing. I would be able to pay my monthly rent,” Tembo tells IPS.

Where is the money?

But Tembo and Longwe, who are among the first beneficiaries listed for the cash transfers, are yet to receive the money. And they have not been informed why. They fear that remarks by the country’s Vice President Saulos Chilima, who said at a political rally in May that donors have withheld the funds for fear of abuse, may in fact be true.

However, spokesperson for the Treasury Department in the Ministry of Finance Williams Banda tells IPS that the funds are there but disbursement is delayed because they have been working on “implementation modalities”.

“The World Bank was targeting the peri-urban hotspots of the major cities … [but] when the technical committee looked at the list, they noted that the targeted beneficiaries [vulnerable groups] were not on the lists,” says Banda.

Banda says this forced the technical committee to suspend the listing and start engaging with “the ones who do the normal social cash transfer, to get to those who are indeed vulnerable and very poor individuals in the peri-urban hot spots”.

Lockdown versus elections

However, many still doubt if the lockdown will ever take off as political leaders intensify their campaign rallies ahead of the country’s presidential re-run, expected to be held on Jul 2.

• Malawi is expected to go polls after the Constitutional Court nullified the country’s May 21, 2019 presidential elections citing massive and systematic irregularities, including the use of correctional fluid on the ballots. 
• In its verdict on February 3, the court ordered fresh polls within 150 days, which ends on July 3. Parliament, which is currently sitting in the capital Lilongwe, is expected to set a date for the fresh polls.

But at a political rally on Saturday, Jun. 6, in the Zomba City in southern Malawi, former President Joyce Banda accused the government of exaggerating figures of COVID-19 cases.

Malawi has so far confirmed 455 COVID-19 cases with 4 deaths and 55 recoveries. 

“Since April, we have only registered four deaths, and recently we saw the government faking people suffering from the coronavirus, to find an excuse to postpone the election through a lockdown, but still, more are recovering.

“Let’s just thank God that we have been spared from this pandemic rather than deliberately bloating cases to attract donor money,” she had said.

Her remarks were an echo of what other opposition leaders have been saying; that the government should forget imposing a lockdown as Malawians are eager to go to polls.

Cash transfer to start soon … but what of COVID-19 testing?

While it is uncertain if the country will ever go into a lockdown, Minister of Population Planning and Social Welfare Clara Makungwa tells IPS that with or without the lockdown, the emergency cash transfer will still roll out because of the increasing number of people impacted by COVID-19. This includes migrant workers who are returning home, as well as those who are unable to run their businesses as people implement their own social distancing measures here.

“Figures for those affected are getting bigger and bigger now. For example we have 17 busses coming soon with people [migrant workers who were stranded in South Africa because of the lockdown there] who are coming back home, they are helpless. Those that have businesses are suffering. They are not enjoying the usual business as they were doing before. These people still need assistance,” she tells IPS. 

Makungwa says some of the issues which delayed the roll out of the programme have been resolved and expectation is that the exercise would start by the end of this month.

“We needed to train the enumerators, brief the block leaders because they are the ones to benefit and also work with city councils.  So we have come that far and we are now ready for the enumerators to go round doing the enlisting and the programme will roll out,” says Makungwa.

However a lecturer in economics at Malawi Polytechnic, Betcheni Tchereni, tells IPS that although the cash transfer would help mitigate the impact of the virus on the poor, efforts to contain the spread of the virus should also be funded.

“The best thing that we should do is procure enough testing kits and make sure that pretty much everybody has been tested. That way then it will be alright and make sure that porous borders have been closed. Because you have seen that most of the people have been affected or infected because of someone who travelled from abroad,” Tchereni tells IPS.

Malawi with a population of about 18 million has just tested 13 COVID-19 testing sites according to the Public Health Institution of Malawi. About 6,000 people have far been tested.

Credit: Servaas van den Bosch/IPS

By Phillip Kaeding
UNITED NATIONS, Jun 28 2016 (IPS)

Currently only six percent of humanitarian aid worldwide comes in the form of cash handouts, yet many aid organisations believe that cash transfers should be seen as the rule, not the exception.

Both the World Food Program (WFP) and World Vision International, who work together in Somalia, South Sudan and other crisis-ridden countries, stressed the advantages of cash instead of in kind allowances at a meeting held here Monday.

“There is no longer a question about ‘does cash work’ or ‘is cash the right tool’,” said Amir Mahmoud Abdulla, Deputy Executive director of the WFP.

George Fenton of World Vision explained:

“Digital humanitarian cash transfers are one of the most significant and most exciting innovations of today. They offer… a greater dignity, choice and flexibility for crisis-affected people.”

Due to increasingly widespread mobile phone ownership, cash transfers are now often made digitally. In some circumstances, including refugee camps, aid organisations may hand out cash directly.

The transfers are usually given unconditionally, since this is considered an effective way to provide assistance to a person in need. Whereas in-kind assistance such as food or materials, may not suit the specific needs of the recipient, cash transfers allow recipients to spend money on their most urgent needs, while also supporting local markets.

However, while cash transfers have been considered successful in the settings where they have so far been rolled out, humanitarian organisations, such as the World Bank now want to work out how to make wider use of the concept. As Amir Abdulla put it: “How do we take it to scale?”

In order to do this, some obstacles need to be overcome, methods of delivery have to be streamlined and there has to be a response to the “need to marry cash and technology,” as Fenton puts it.

Colin Bruce, senior advisor to the World Bank President, told the meeting about upcoming challenges: “Until we can better coordinate those processes (needs assessments and response analyses), it’s going to be very difficult to get the kind of upstream thinking, funding and programming necessary to take cash to scale.”

Secondly, a “change in mindsets” has to take place, as Sarah Bailey told IPS this week. Bailey is a Research Associate at the Overseas Development Institute (ODI) and Secretariat Manager of the High Level Panel on Humanitarian Cash Transfers which produced the report Doing Cash Differently. She explained to IPS that “cash transfers turn notions of aid and charity on their head. Rather than the giver deciding that people need food or clothes, the choice is with the people themselves.”

The desired shift to cash-based aid is closely linked to the fund-raising side of humanitarian programs. Charlotte Lattimer of the non-profit research organization Development Initiatives emphasized that although funding increased in the last year, there still exists “an enormous shortfall in terms of meeting humanitarian needs”.

Donors are increasingly asking for more transparency and more precise reporting on exactly how funds are spent, which is difficult if it is spent by the recipients instead of the aid organization.

Still “cash transfers are a tangible opportunity for more aid transparency because it’s easier to track the movement of money than the movement of food and buckets. Far from cash transfers being a risk to accountability, cash can be a vehicle for it,” Bailey told IPS.

Further research may help determine whether cash transfers can provide the transparency donors ask for. With innovations in the field of digital transactions and mobile banking and payment, the infrastructure for new aid delivery concepts improves year by year.

It is this development that aid organizations hope will catch the attention of donors. Bailey explained to IPS why she is convinced that cash transfers will become more and more important. At the end of the day, financial arguments decide financial questions: “Delivering cash is cheaper than delivering in-kind aid. You do not need to rent a warehouse and hire a driver to get money to people. As aid agencies use cash more it will become even cheaper with economies of scale.”

Fifty-five percent of the world’s poor still have limited protection from hunger and economic, social or political crises despite expansion of social safety programmes in developing countries in recent years.

According to a report released by the World Bank on Jul. 7, most of the poor without a social safety net system are in lower-income countries, especially in sub-Saharan Africa and South Asia, where the vast majority of the world’s poor reside.

In these countries, safety schemes like cash transfers and school feeding programmes only cover 25 percent of the extreme poor, compared to 64-percent coverage in upper-middle-income countries.

Existing social welfare mechanisms are insufficient to close the poverty gap, leaving approximately 773 million people struggling to survive, experts say.

The report, the second in a series, was released following the World Bank Group and International Labor Organisation’s (ILO) announcement of their goals to provide universal social protection within the next 15 years.

A joint statement released by the two organisations on Jun.30 cited universal coverage and access to social protection as twin goals by 2030.

“The World Bank Group and the ILO share a vision of social protection for all, a world where anyone who needs social protection can access it at any time,” according to the joint statement by Jim Yong Kim, president of the World Bank Group, and Guy Ryder, executive director of the ILO.

“The new development agenda that is being defined by the world community – the sustainable development goals (SDGs) – provides an unparalleled opportunity for our two institutions to join forces to make universal social protection a reality, for everyone, everywhere.”

The report comes just ahead of the United Nations’ third Financing for Development (FfD) conference scheduled to take place in the Ethiopian capital Addis Ababa next week, where world leaders will discuss plans for funding the post-2015 development agenda, due to be launched in September.

The issue of providing universal social protection is slated to be at the centre of the agenda.

The five largest social safety programmes in the world are in China, India, South Africa and Ethiopia, where regular assistance reaches a combined total of 526 million people.

According to the report, all countries have at least one type of social security scheme, while the average developing country has about 20 such programmes. Globally, approximately 1.9 billion people benefit from these mechanisms.

On average, low-middle-income countries devote 1.6 percent of their gross domestic product (GDP) to these mechanisms, while richer countries devote 1.9 percent of their earnings to social programmes.

The World Bank reports that poor policy choices lie at the heart of inefficiencies in adequately providing for the poor. Fuel and electricity subsidies, for instance, reduce the portion of government spending allocated to social spending. These regressive subsidies disproportionately benefit the rich.

For example, Yemen spends nine percent of its GDP on energy and electricity subsidies, compared to the three percent it spends on social security net programs. The country, engulfed in political turmoil for the past few years, is already one of the poorest countries in the Arab World with up to 54.5 percent of its population living in poverty.

As developed countries like the United States and the European Union grapple with the balance between providing social security and maintaining economic growth in the slumping economy, developing countries have expanded their safety nets in a bid to reduce poverty.

Cash transfer programmes, recommended by the report as the most effective method, has “positive spillover effects on the local economy.” For each dollar transferred, the total income of the beneficiary increases from 1.08 dollars to 2.52 dollars.

“There is a strong body of evidence that these programmes ensure poor families can invest in the health and education of their children, improve their productivity, and cope with shocks,” said Arup Banerji, the World Bank Group’s senior director for social protection and labour.

“Going forward, more can be done to close the coverage gap and reach the world’s poorest by improving the effectiveness of these programmes underpinned by enhanced targeting, improved policy coherence, better administrative integration, and application of technologies.”

Edited by Kanya D’Almeida

New studies argue that mobile technologies can be more effective than microcredit in promoting entrepreneurship and fighting poverty in developing countries, like Mauritania. Credit: Kristin Palitza/IPS

By Farangis Abdurazokzoda
WASHINGTON , May 31 2014 (IPS)

Mobile-finance and direct cash grants are revolutionary tools that can substitute for under-developed financial sectors and help reduce poverty and promote entrepreneurship in developing countries, according to researchers here.

Rodger Voorhies of the Bill & Melinda Gates Foundation and Christopher Blattman, a Columbia University political scientist, say these two potentially empowering mechanisms can help global efforts to provide needed assistance to vulnerable and poor populations.

In a teleconference hosted by the New York-based Council on Foreign Relations (CFR), one of the country’s most influential think tanks, the two men argued that mobile technologies can help poor people in developing countries manage their personal finances, including savings, insurance, credit, and cash transfers that many in the developed world take for granted.

Mobile technologies can help fill the gap by providing easy and free access to financial tools, according to an article published in CFR’s journal, ‘Foreign Affairs’, co-written by Voorhies and Jake Kendall, who also works at the Gates Foundation.

The article, ‘The Mobile Finance Revolution’, cites World Bank statistics showing that, on average, nearly nine out of every ten people living in a developing country have a cell-phone account, although some users may, of course, have multiple accounts.

Mobile technologies are more effective than much-lauded microcredit programmes in promoting entrepreneurship and fighting poverty, according to the article.

Among other advantages, they eliminate the bureaucracy and routine banking costs associated with in-person and cash transactions. In addition, mobile-finance clients generate data that can be further used by banks and investors as an alternative for the traditional credit scores, according to Voorhies and Kendall.

In a second article titled ‘Show Them the Money’, Blattman and Paul Niehaus, who teaches economics at the University of California San Diego, detail recent studies that show the effectiveness of cash grants and outline the comparative disadvantages of microloans and related programmes, such as donating money to buy cows, goats, seeds, beans, tools, and other agricultural inputs, as well as schoolbooks and clothing for poor families.

Not everybody wants a cow

Despite the fact that the microcredit movement brought significant positive results – recognised in 2006 when the Bangladesh-based Grameen Bank and its founder, Muhammad Yunus, were awarded with a Nobel Peace Prize – a series of more recent studies on the effects of microloans have put their success into question, according to Blattman and Niehaus.

In one study, the economist Abhijit Banerjee of the Massachusetts Institute of Technology (MIT) and a number of collaborators examined the case of the Indian non-profit Spandana that provided 250 dollar loans to women in Hyderabad at low-interest rates. Over three years, they found no measurable improvements in the education, health, poverty, or women’s empowerment among the recipients.

After collecting an additional 20 years of data on Spandana’s lending and their borrowers, Banerjee found “no evidence of large sustained consumption or income gains as a result of access to microcredit.”

As for the effectiveness of training programmes, economists David McKenzie and Christopher Woodruff reviewed the outcomes of the International Labour Organisation’s ‘Start and Improve your Business Programme’ that has provided training to over 4.5 million people in over 100 countries since 1977. They found that there was little lasting effect on the sales or profits of the business owners in the recipient countries.

“No wonder people in developing countries, when given the choice, don’t necessarily choose to invest in skills training,” write Blattman and Niehaus.

The two authors argue that providing cash grants to poor people directly is also preferable to supplying goods that will presumably be used by recipients to increase their income or skills.

They argue that poor people in developing countries often use the cash to buy the same things that aid organisations would provide, such as livestock, tools, or training, in any event, but giving people cash directly provides them with more flexibility.

“Not everyone, after all, wants a cow,” the authors write.

Blattman and Niehaus do not deny the benefits of aid, training programmes, and microloans but insist that significant improvements are possible depending on how the money is allocated.

In a study conducted in Uganda, 250 groups of 15-25 young adults were each given 400 dollars in cash to spend as they wished, so long as the purpose was to enhance their livelihood.

The study found that most of the money was spent on acquiring the physical tools and materials they needed to start working, and only ten percent was used for training. It turned out that over four years, the participants’ incomes rose by an average of 40 percent.

A similar study was conducted in Liberia, where unconditional 200 dollar grants were given to drug addicts and petty criminals. The recipients “did not waste the money,” but used it to fund legitimate enterprises.

“Fears that poor people waste cash are simply not borne out by the available data,” the authors write.

Cash or cell phones?

Blattman and Niehaus outline the benefits of cash transfers over traditional aid programmes. They emphasise the importance of money transfers in places where the population has been hit by unexpected crises – conflicts, natural disasters, or extended periods of political uncertainty.

“Think of Southeast Asia after [the] tsunami or the Middle East flooded with Syrian refugees, where the returns on capital after a recovery period are likely to be unusually high and the challenge of making smart investments without localised knowledge unusually large,” the authors write.

Further, cash transfers are essential to emerging markets that have relatively stable economies but where few firms offer jobs and where most workers, by necessity, are self-employed.

More specifically, the authors suggest that cash transfers better enable entrepreneurs to start businesses in countries where banks and other credit institutions are weak or under-developed.

Just as Blattman and Niehaus argue that cash transfers can be particularly helpful in emergency situations, Kendall and Voorhies insist that cell phones may actually prove more effective.

“A study in Niger by a researcher from Tufts University found that during a drought, allowing people to request emergency government support through their cell phones resulted in better diets for those people, compared with the diets of those who received cash handouts,” according to the authors.

In addition, studies have shown that cell phones encourage financial discipline and savings. In Malawi, for example, farmers were offered an option to have their harvest proceeds directly deposited into savings accounts. Those farmers who chose this option ended up investing 30 percent more in farm inputs and had a 22 percent increase in revenues compared to those who chose not to participate.

But while both articles articulate valid criticisms of how aid and microloan organisations operate, they fail to address important aspects. The most obvious are literacy rates, especially low financial literacy that is often prevalent in developing countries. The issues that need to be considered with mobile-finance are the access of affordable network providers as well as a very basic one – electricity.

By Hazel Henderson
ST. AUGUSTINE, Florida, Dec 17 2013 (Columnist Service)

The debate over structural unemployment, automation and jobless economic growth began in the 1960s as car factories replaced workers with robots.

Futurists like myself saw these technologies taking over sectors of industrial economies as opportunities for a transition to “post-industrial” information and services-based “leisure societies,” and to develop human potential, lifelong learning, research, preventive healthcare, the arts, entertainment, sports and tourism.

Some parts of our vision have materialised: tourism and entertainment are major global industries. Research has produced medical breakthroughs, new sectors based on IT, the internet, 3-D printing and drones as well as democratising education electronically in massive open online courses (MOOCs).

Alas, missing today are our futurist visions which included a key corollary to this IT takeover of work: unconditional guaranteed incomes to provide the needed purchasing power to keep up aggregate demand for this new cornucopia of goods and services. We also held that if workers were replaced by machines, they would need to own a piece of those machines.

Hazel Henderson

This debate is back, as inequality reaches crisis levels in Europe and the U.S. with the share of incomes from increased productivity falling for workers while capital owners’ and executives’ returns soar to new heights. This inequality now leads to further stagnation in many economies.

Guaranteed cash transfers directly to poorer citizens are raising living standards in Mexico’s “Oportunidades” and Brazil’s “Bolsa Familia” payments which have pulled millions up into the middle class.

These payments, called conditional cash transactions (CCTs), only require that children attend school and get medical check-ups. In Europe, the movement for unconditional basic incomes responding to widespread rising structural unemployment has led to widespread demonstrations and to a ballot initiative in Switzerland.

Meanwhile, Silicon Valley IT giants Amazon, Google and others in Japan are targeting more sectors for takeover, as they have disrupted retailing, entertainment, news media, finance and other industries.

Google’s driverless cars will threaten millions of entry-level jobs for people driving taxis and trucks. Computer scientist advisor to Microsoft Jaron Lanier paints the future digital takeover vividly in Who Owns the Future (2013). He calls for a new economy based on digital value-sharing where all personal information given by individuals to Facebook, Twitter, Amazon, Google, LinkedIn or other such firms, be paid for, since this data provides these firms with their key asset.

Selling personal information, using Big Data for marketing, not to mention handing it over to governments, is a basic IT business model.

Google’s next big projects beyond rolling out Google glasses, with all their privacy implications, is producing robots they say will relieve humans from drudgery. This claim has been used by automation enthusiasts for decades.

Economists have also avoided the implications of jobless productivity: recommending more education and re-training, while sidestepping the more controversial examination of laissez faire economic theories. Yet, unemployment faces many graduates, many thousands of whom work as janitors and part-timers. Government policies often redistribute growth unfairly in tax breaks, subsidies to powerful interests in exchange for political contributions.

All these trends revive the big questions asked for decades: what is the purpose of technology? Why does the hare of private sector technology always outrun the tortoise of social innovation? In 1974, the U.S. set up its Office of Technology Assessment (OTA) on which I served, to answer these questions: how would the benefits and impacts of new technologies affect different groups in society, as well as the environment and overall quality of life?

Take Amazon’s plan to deliver packages quickly using drones. How many are benefited by this and how many may be inconvenienced, annoyed or even injured by all these drones in our public air space? For those millions living near Amazon’s massive distribution warehouses, will such a constant plague of these locust drones overhead spoil their quality of life?

Or take the new proposals that drones may be able to take over crop-pollination from bees, whose populations are threatened by hive collapse or nicotinoid pesticides (New Scientist, Nov. 16, 2013, p. 43). Can drones really replace bees to sustain our human food supply? Who benefits and who loses?

OTA asked all these inconvenient questions until it was shut down by Republicans in Congress in 1996. Their view was to leave all such questions to the magic of the marketplace.

Today, as the digital revolution accelerates with drones and robots populating our societies, all these questions re-emerge, as well as who pays. Will Google, Amazon, Facebook, Twitter, et al., begin paying their users for their personal data, or help pay for the guaranteed incomes for those displaced people whose labour is no longer needed? We are now re-connecting all these dots and our future will depend on new answers.
(END/COPYRIGHT IPS)

Excerpt:

This shantytown in Guatemala City reflects the poverty and inequality that persists in Latin America. Credit: Danilo Valladares/IPS

By Marcela Valente
BUENOS AIRES, Sep 4 2013 (IPS)

Latin America’s cash transfer programmes are a more effective weapon against poverty and social inequality than economic growth alone, according to a study by two Argentine economists.

In 2010, these social programmes operated in 18 countries, reaching 19 percent of the region’s approximately 600 million people and achieving “a substantial reduction in extreme poverty and a significant fall in inequality,” according to the study published by the Centre for Distributive, Labour and Social Studies (CEDLAS) of the National University of La Plata.

The report, “Políticas sociales para la reducción de la desigualdad y la pobreza en América Latina y el Caribe” (Social policies to reduce inequality and poverty in Latin America and the Caribbean), by Leonardo Gasparini and Guillermo Cruces, reviews regional programmes for income transfer to the poorest of the poor and recommends expanding them in order to eradicate extreme poverty.

Gasparini and Cruces, CEDLAS’ director and deputy director, respectively, say that non-contributory programmes “were the main innovation” in social policies in the region over the last decade.

“Cash transfer plans are very useful instruments as part of an overall strategy for reducing poverty and inequality,” Gasparini told IPS. “They are relatively easy to implement, administer and monitor, and they have a direct impact on the beneficiaries’ quality of life.”

Gasparini highlighted the advantages of the conditions attached to the payments, which provide “an incentive for certain behaviours, such as encouraging school attendance by children and teenagers, and more regular health checks.” While they “are not a complete solution to the serious problem of income distribution, their importance should not be underrated,” he said.

According to the study, published in March, even in a scenario of sustained economic growth, programmes like Argentina’s universal child allowance (Asignación Universal por Hijo) and Brazil’s family allowance programme (Bolsa Família) “play an essential role in achieving improved distribution.”

“The region cannot depend solely on economic growth, even if there is full employment, because social protection is also needed,” the study says.

The plans, which different in format, aim to provide a monthly transfer from state coffers to low-income families or elderly people who worked in the informal economy and do not draw pensions. The family plans usually require school attendance and health checks for children under 18.

Ecuador’s human development voucher (Bono de Desarrollo Humano) has the widest coverage, benefiting 44 percent of the country’s total population. But Brazil’s family allowance is the largest programme in absolute terms, covering 52 million of the country’s 198 million people.

Other programmes are Oportunidades in Mexico, Bono Juancito Pinto in Bolivia, Chile Solidario, Familias en Acción in Colombia, Avancemos in Costa Rica, Red Solidaria in El Salvador, Mi Familia Progresa in Guatemala, Programa de Asignación Familiar in Honduras and Red Oportunidades in Panamá.

The list continues with Tekoporâ/ProPaís II in Paraguay, Juntos in Peru, Solidaridad in the Dominican Republic, Plan Equidad and Asignaciones Familiares in Uruguay, and similar plans in Nicaragua and Venezuela.

The least effective plan appears to be Mexico’s Oportunidades, judging by the rise in poverty, which affected 53.3 million of the country’s 118 million people at the end of 2012, according to the National Council for the Evaluation of Social Development Policy (CONEVAL). Given these results, the government is reviewing the programme.

“The basic weakness is the concept that the problem of poverty is due to a lack of skills, and that the main focus must be on funding capacity building,” said Clara Jusidman, honorary president of Incide Social, an NGO in Mexico.

“Oportunidades is a typical programme that views the supply side of the problem, seeing individuals as falling short when it comes to joining the labour market and taking part in development,” she told IPS.

Created in the late 1990s, Oportunidades, which took on its current form in 2002, has a 2013 budget of over five billion dollars and aims to benefit 5.8 million families. The family allowance is conditional on children and teenagers staying in school and attending health checks.

According to Jusidman, “under this plan, human rights have been violated and people have been excluded, and the state takes a paternalistic attitude, because beneficiaries are transformed into subordinates who must wait on the decisions of governments and officials.”

Gasparini and Cruces pointed out that in the 1990s, the region’s economic growth was associated with greater inequality. In contrast, since the turn of the century, cash transfer programmes have contributed to an acceleration of the reduction of poverty, and especially extreme poverty.

The proportion of people living on less than 2.50 dollars a day shrank from 27.8 percent of the population of Latin America in 1992 to 24.9 percent in 2003, 16.3 percent in 2009 and 14.2 percent in 2010, the study says. It recommends expanding coverage to bolster the impact of the programmes over a shorter timespan.

“In several countries, the beneficiary base is still small and in others the amounts involved are trifling. There is room to expand these programmes,” Gasparini said. However, he did not think universal coverage was necessary. “It makes no sense to extend the programmes to the non-vulnerable population,” he said.

The study observes that, with slower growth, fighting poverty takes longer. For instance, if per capita GDP grows at an average of two percent a year, 5.5 percent of the population will be living in extreme poverty in 2025, while if growth stands at four percent, less than three percent of the population will be extremely poor by that year.

In contrast, with an “additional fiscal effort of 0.5 percent” of GDP for these social programmes, the region would achieve the same poverty reduction 10 years earlier, in 2015.

Based on the Economic Commission for Latin America and the Caribbean (ECLAC’s) figures for 2010, the region spent an average of 0.4 percent of GDP on cash transfer programmes. According to the authors, some countries could increase their efforts, in line with the study’s recommendations, while others may have to take out external loans.

The countries that will need most aid are those where a high proportion of the population is in the informal economy and therefore lacks health and retirement coverage – such as Bolivia, Ecuador, Mexico, Nicaragua, Paraguay and Peru.

“Bolivia, Nicaragua and Guatemala need foreign assistance for programmes to cover the proportion of their population living in extreme poverty,” Gasparini said. The other countries have the resources to finance these programmes, and even to expand them, he said.

The head of CEDLAS said the current average expenditure seemed relatively small compared with other subsidies that benefit the middle and upper classes. He added that while these programmes are sometimes criticised, “there is broad social support in most countries and very few candidates to elected posts in the region openly call for their elimination.”

Gasparini said, however, that support for the programmes “does not negate the fact they may have undesirable features, such as slowing down the rate of formalisation of the economy, or effects on the supply of labour, which need more serious work.”

With additional reporting by Emilio Godoy in Mexico City.