Conditional Cash Transfer Programs: A "Magic Bullet" for Reducing Poverty?

In 1997, the Government of Mexico introduced a conditional cash transfer (CCT) program called Programa de Educación, Salud, y Alimentación (Progresa), providing assistance to about 300,000 extremely poor households. The essential premise of a CCT program is a cash transfer to households, conditioned on their participation in health, nutrition, and education services. Ten years later, Progresa, now Oportunidades, covers more than 5 million households in all 31 Mexican states. Approximately 20 countries have adopted a pilot or full-scale CCT program, and another 20 countries have expressed interest in starting one. Most current programs are in Latin America, but others can be found in Asia, Africa, and the Caribbean, and interest is increasing among African countries struggling with extreme poverty and low human capital. CCT programs are increasingly perceived as being “a magic bullet in development.” Are they? This brief presents a review of the rationale and operation of CCT programs, an assessment of their effectiveness, and a discussion of key issues facing countries considering these interventions or reforming existing programs.