Conditional Cash Transfer - Unconditional Versus Conditional Cash Transfers

Unconditional Versus Conditional Cash Transfers

There is currently much discussion about whether conditionality, or conditions for the cash transfer, is necessary or important to a cash transfer program. Research, such as the pilot conditional cash transfer program in Indonesia called Generasi, examined the importance of conditionality. One report looks at data from Mexico's Oportunidades/Progresa program, which looks at families who accidentally did not receive forms that monitor school attendance and therefore received unconditional cash transfers. It then compares them with those households that did receive the forms. It was shown that conditionality had the strongest impact on children's attendance to secondary school, as enrollment rates in secondary school were higher for those that received the forms.

Another report on an experiment in Malawi is researching the importance of conditionality among families with school-age girls. The program was conducted, with data collected between October 2007 and June 2010. It was found that the treatment arm providing conditional cash transfer programs had higher enrollment rates, as well as higher scores in independently administered tests of cognitive ability, mathematics and English reading comprehension. However, the UCT treatment arm had a much lower incidence of pregnancy and marriage among schoolage girls.

A strong argument against the conditionality of social cash transfers is proposed by proponents of a rights-based approach to development. From a human rights perspective, cash transfers are a means to ensure the human rights to social protection and an adequate standard of living for all members of society, including first and foremost the fundamental right to food. States have the duty to ensure those rights with a maximum of available resources. While reducing poverty in general, conditional cash transfers have shown to often exclude those who need it the most, violating the human rights principle of non-discrimination and equality.

The following program in Malawi is an example of an unconditional cash transfer:

The Mchinji Pilot Social Cash Transfer Scheme is part of the larger Malawi Social Protection Policy and Framework, and began in April 2006. It is mainly financed by UNICEF and the National AIDS Commission. The objectives of the scheme are to reduce poverty of people in the pilot area who are ultra poor and labor constrained, increase school enrolment and attendance, and to generate information regarding the feasibility of a cash transfer program as part of a Social Protection Programme for Malawi. The goal for this program is to reduce the ultra poverty rate from the 22% rate in 2007 to 10% by 2015.

This program targets those households that are ultra poor (See poverty for definition) and those who are labor constrained, defined as either a household in which no able-bodied members 19-64 can work due to chronic sickness or disability or a household with one-able bodied member that has to care for more than three dependents. About 22% of Malawi as of 2007 was ultra-poor, living on less than 20 cents a day, and of that group 10% are labor constrained.

The program would give anywhere from 600 kwacha ($4 US) monthly for a one person household to 1800 kwacha ($13 US) monthly for a four or more person family. There is also an extra bonus of 200 kwacha for children enrolled in primary school and 400 kwacha for children enrolled in secondary school. The location for the program is in the Mchinji District, the 14th poorest district out of 28 in Malawi.

It was chosen for its average poverty level of all the districts in Malawi and its proximity to the capital, Lilongwe.