KEY ACHIEVEMENTS
- The World Bank has been progressively scaling up support to social safety net projects in Latin America and the Caribbean, reaching 73 million beneficiaries with its lending from FY19-23.
- Between 2017 and 2022, half a million children were added to the Universal Child Allowance in Argentina. As of December 2020, women constituted over 90 percent of the 2.4 million beneficiaries receiving these transfers (Spanish).
- Between 2001 and 2011 the Familias en Acción Program in Colombia grew to cover 2.7 million families. Long-term (10-year) impact for beneficiaries (Spanish) in rural areas was a 6-percentage point decline in children’s chronic malnutrition and a 6-percentage point increase in the likelihood of finishing secondary school.
- From 2017 to 2022, in the Dominican Republic, more than 30,000 youths from households enrolled in the Conditional Cash Transfer (CCT) program completed skills training, with women making up 70 percent of these participants.
- According to 2017 data, a CCT program in Honduras demonstrated an 8 percent reduction in poverty; a 20 percent drop in the number of children engaged in child labor; and a 7-10 percent increase in school enrollment. Mothers also increased their role in child-rearing and household budgeting decisions.
- Since 2021, an unconditional cash transfer safety net program in Haiti provides monthly cash transfers to 22,400 most vulnerable households (20 percent of the population) in the department of Grand’Anse and was scaled up to provide emergency response to an additional 3,000 affected households following the 2021 earthquake and 2023 floods.
SYNOPSIS
Over the last two decades most countries in the Latin America and Caribbean (LAC) region initiated and strengthened social assistance programs, addressing long-standing regional challenges of poverty, inequality, lagging human capital outcomes, and vulnerability of the poor to shocks. The World Bank and other development partners have accompanied governments as they implemented a variety of programs tailored to their circumstances and priorities; developed delivery systems to reach the poorest; and rigorously evaluated impact.
Over time, most programs expanded in scope and budget to encompass more ambitious efforts, such as working toward guaranteed access to social assistance programs for all those eligible, and supplementing cash transfers with complementary services for early childhood development and economic inclusion.
My parents did not have an easy life and always struggled so that I could have a better life. My dream is to have a house and a family. This is why I work, and I feel that I am getting closer to achieving it. I believe that the Universal Child Allowance was part of my life and my path to this point.
-Leonardo, Universal Child Allowance beneficiary, Argentina
CHALLENGE
High Poverty Exacerbated by Gaps in Human Capital and Access to Social Protection
In the early 2000’s, Latin America and the Caribbean faced multiple challenges to improving the welfare of the poor and preventing the intergenerational cycle of disadvantage. The poverty rate (measured using $5.50, USD-PPP 2011 a day poverty line) was alarmingly high, exceeding 40 percent across the region and surpassing 30 percent in many middle-income countries. Addressing the underlying structural sources of poverty was essential.
For instance, even when schools were accessible, poor children often missed out on education due to the costs of supplies, transportation and the need for their contribution to household chores and income. Similarly, these barriers prevented children from benefiting from healthcare services. In fact, a key factor behind inequality was the unequal access to education. Even in countries like Peru, which had made strides in reducing poverty, human development outcomes, such as rates of child chronic malnutrition, remained concerning.
Over half of the region’s workforce was employed in the informal sector, without access to social insurance. In most countries, social assistance programs were few, ad hoc, fragmented, and showed weaknesses in design and targeting. Additionally, frequent and costly disasters threatened economic growth and prosperity, and the inadequacies of social protection systems left many countries ill-equipped to respond effectively.
Over the following two decades, with support from the World Bank, many countries in the region pioneered and continuously refined flagship cash transfer programs, primarily conditional cash transfers (CCTs). These programs were among the first of their kind to be created and implemented on a global scale and serve as a model for large-scale interventions aimed at addressing these pervasive challenges.
APPROACH
Social protection policy in the region has evolved over time. Starting in the early 20th century, most LAC countries began establishing social insurance schemes, but did relatively little on social assistance. This started to change in the late 1990s, in response to shocks and the implementation of structural reforms. Pioneering flagship programs in Brazil, Colombia, and Mexico led the way. Over time, these programs expanded to incorporate additional services, including early childhood development, adult education, job training, and rural productive inclusion.
Over the first two decades of the 2000’s, regional policy shifted its focus from simply creating strong foundational programs that reliably and transparently reached beneficiaries to addressing coverage gaps and moving toward a systems approach. This approach aims to integrate programs to support and reinforce one another, particularly in relation to economic inclusion, with the aim of helping beneficiaries graduate out of poverty. The establishment and continuous improvement of social registries has been instrumental in these efforts across several countries.
Financial Resources to Support Cash Transfer Programs, Complemented by Knowledge Generation and Sharing
Beginning with a loan to Colombia in 2001, to date, World Bank projects have supported cash transfer programs totaling nearly $14.3 billion in 22 countries, including Brazil, Argentina, Mexico, Colombia, Peru, Ecuador, and several Caribbean countries, representing about half of the countries in the region. As of 2024, the active lending portfolio amounts to $2.4 billion across nine countries. These programs are tailored to the unique needs of each country. For instance, while many countries have focused on CCTs, Argentina has prioritized universal child allowances, and Peru, among others, has focused on integrating cash transfers with additional services. Support has also focused on enhancing the infrastructure that delivers these programs, such as social registries and payment and information systems, by leveraging technology. Furthermore, the World Bank has had a contributing role in evaluating the effectiveness of these programs by promoting the inclusion of process evaluations, spot-checks, audits, and impact evaluations in projects, supporting them with technical inputs.
The approach aligns with the focus areas identified in the World Bank’s global strategy for social protection and is consistent with a vision of progressively realizing universal social protection, prioritizing those most in need, and addressing the largest uncovered risks through integrated policies and programs. The strategy highlights the importance of institutional capacity, especially strong delivery systems to enable effective implementation.
Complementing substantial financial resources, the World Bank supported countries in the region by providing technical and analytical support. Since the mid 2000’s, the World Bank has also promoted knowledge sharing by hosting South-South conferences on CCT programs and forming a community of practice among five early adopters of cash transfers: Brazil, Chile, Colombia, El Salvador, and Mexico. CCT program managers from client countries and World Bank staff, met on a regular basis as a community of practice, to share experiences and discuss program implementation challenges. The community of practice became a model for a similar World Bank-supported initiative in Africa. Additionally, advisory and analytical services have contributed to the evolution and fine-tuning of these programs to improve their effectiveness.
RESULTS
By the early 2010’s, World Bank lending supported CCT Programs in 10 countries in LAC, covering 22 million households. From FY19-23 this coverage expanded to reach 73 million beneficiaries in eight countries. Examples from around the region illustrate the diverse approaches that countries used to achieve impact.
In the Integrated Social Protection and Promotion Project, the World Bank supported the Dominican Republic in closing coverage gaps for poor CCT recipients. In all, nearly 150,000 households (representing almost 500,000 people) became recipients of the transfer linked to health visits, and nearly 273,000 students received transfers linked to school attendance. About 150,000 individuals gained access to subsidized health insurance, and over 30,000 youths from CCT households, 70 percent of whom were women, received vocational education and job search assistance.
In Honduras, one of the region’s poorest and most unequal countries, IDA credits totaling $77 million from 2010 to 2018 contributed to the establishment of a national CCT program, conditional on school attendance and preventive health services for children under five years old. World Bank support helped develop a mechanism that efficiently targeted the transfers to the most vulnerable and poorest households in the country, including Indigenous communities. Impact evaluations demonstrated an 8 percent reduction in poverty; a 20 percent drop in the number of children engaged in child labor; and a 7-10 percent increase in school enrollment. The program also improved child growth monitoring by 11 percent, with only 9 percent of participating children being underweight (compared to 35 percent for non-participants). Beneficiaries were also more likely to make home improvements, strengthening their resilience to flooding and other climate-related hazards. The program also empowered female beneficiaries by increasing their involvement in decisions on child rearing and household budgeting.
In 2021, Haiti launched a new flagship unconditional cash transfer safety net program (Klere Chimen) with the support of the World Bank. Klere Chimen provides monthly cash transfers to 22,400 most vulnerable households (20 percent of the population) in Grand’Anse, a rural department that is highly exposed to natural disasters and poverty, including food insecurity. The program was scaled up to provide emergency response to an additional 3,000 affected households following the 2021 earthquake and 2023 floods.
Beginning in 2016, the government of Argentina, with World Bank support, improved the management of the Universal Child Allowance (Asignación Universal por Hijo, AUH), a cash transfer program with co-responsibilities in health and education for children whose parents are inactive, unemployed, or low-income informal workers. The Children and Youth Protection Project reduced coverage gaps due to incomplete government data and failures to verify compliance with co-responsibilities, which affected undocumented and other vulnerable children. Protocols and software facilitated data exchange between the social security agency and national and provincial civil registries. On-the-ground outreach in marginalized urban neighborhoods, Indigenous communities, and remote areas supplemented technology-based strategies.
In 2018, the introduction of a mobile phone application allowed AUH beneficiaries to easily submit necessary documents, like birth certificates and proof of meeting health and education co-responsibilities. A newly integrated system eliminated lags in payment and facilitated case resolution by identifying reasons for ineligibility. By January 2023, the number of AUH beneficiaries had risen from 3.8 million to 4.3 million.
On average, from 2017 to 2019, the AUH program helped reduce extreme poverty among its beneficiaries by 4 percentage points. It also laid the foundation for other government initiatives in social protection, healthcare, and education. In the latter half of 2020, during the COVID-19 pandemic, enhancements to the AUH program halved extreme poverty within the intended demographic. These improvements also contributed to better school retention and attendance rates, especially among teenagers.
In 2001, Colombia was one of the first countries in the region to receive support for a cash transfer program from the World Bank. In total, three projects (the Human Capital Protection Project, the Social Safety Net Project, and the Support for the Second Phase of the Expansion of the Program of Conditional Transfers – Familias en Acción Project), supported the CCT Familias en Acción. The program started as a pilot in 22 municipalities. By the time the third project closed in 2011, the program had expanded nationwide, benefiting 2.7 million families. It has since been discontinued, but Familias en Acción showed positive results while it was active. For example, a review of long-term impacts of the program showed that beneficiary children reached higher levels of schooling and learning outcomes and were 4-8 percentage points more likely to complete secondary school. Children who participated from a young age had better measures of nutritional status and cognitive development. The program reduced child labor and increased the probability of young women in rural areas having a formal job by 2.5 percentage points.
Aside from lending, the World Bank has supported reforms in cash transfers through analysis and advice. This support has been particularly evident in the case of Brazil’s flagship program, Bolsa Familia (BF). When BF was designed, in 2005, World Bank analysis informed the program’s targeting and monitoring and evaluation systems. Subsequently, the World Bank supported impact evaluations, analyzed labor programs aimed at helping BF beneficiaries graduate from the program, and assessed proposals for BF reforms in 2019. A model developed by the World Bank informed government decisions by simulating the impact of possible BF reforms on poverty, equity, and targeting. More recently, World Bank analyses informed several policies: rules for exiting the BF program (2021); introduction of a savings component for BF beneficiaries who enter formal employment; and design of financial rewards for excellence in education.
A study showing the limited savings capacity of Bolsa Familia households and frequent use of expensive financial products led the government to include financial education as a complementary activity. Other analysis supported the extension of BF, and more broadly of the Ministry of Social Development, into emerging, critical areas, such as response in disaster-affected areas (2023) and education conditionalities for the age groups below six and above 18 years of age. In 2022, the documentation of lessons from Brazil’s social protection response to COVID-19 informed other countries and contributed to improvements in verifying and controlling income declarations for BF beneficiaries. Most recently, in 2023, a profile of Brazil’s working poor, including those in BF, has guided the design of economic inclusion programs.
