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NO. 0709SP DISCUSSION PAPERThe Nuts and Bolts of Brazil’sBolsa Família Program:Implementing Conditional CashTransfers in a DecentralizedContextKathy Lindert, Anja Linder,Jason Hobbs andBénédicte de la BrièreMay 20071 The Nuts and Bolts of Brazil’s Bolsa Família Program: Implementing Conditional Cash Transfers in a Decentralized Context Kathy Lindert Anja Linder Jason Hobbs Bénédicte de la Brière May 20072Abstract This paper is one in a series of World Bank Working Papers that seeks to document the experience of Brazil’s Bolsa Família Program. It highlights the key “nuts and bolts” of designing and implementing the BFP in Brazil’s decentralized context. Like other conditional cash transfers (CCTs), the BFP seeks to help (a) reduce current poverty and inequality, by providing a minimum level of income for extremely poor families; and (b) break the inter-generational transmission of poverty by conditioning these transfers on beneficiary compliance with human capital requirements (school attendance, vaccines, pre-natal visits). The program also seeks to help empower BFP beneficiaries by linking them to other complementary services. As the largest conditional cash transfer in the developing world, the BFP has attracted significant attention both in Brazil and beyond. As such, this paper has two key audiences – and two corresponding objectives. First, the primary audience is international, given world-wide interest in the Bolsa Família Program. This international target audience thus includes: policy makers, practitioners, and potential future practitioners of CCTs working in other countries who are interested in learning more abut Brazil’s experience with the BFP, particularly given its decentralized context. For this audience, the paper highlights some of the key features of the program including: • The program as a reform program, which consolidated four pre-reform programs into one, building on Brazil’s decade of experience with CCTs; • The size and rapid expansion of the program, now reaching 11.1 million families (over 46 million people), making it the largest program of this type in the world; • The very impressive targeting accuracy of the program, and the recently demonstrated impacts on reducing poverty and inequality; • The implementation of the BFP in Brazil’s decentralized context and the development and use of innovative performance-based management mechanisms to promote incentives for quality implementation in this context so as to overcome the “principal-agent” dilemma; • The role of the BFP as a unifying force in social policy, integrating social policy both horizontally across sectors and vertically across levels of government; and • The “natural laboratory for innovation” that has emerged in Brazil’s decentralized context, for experimenting with exit policies and graduation approaches. Second, the topic is clearly of interest to audiences in Brazil. As such, we seek to document the evolution of the design and implementation of the BFP under the first Lula Administration, taking stock of the main advances and highlighting key priorities for the future, including: • Priority actions for further strengthening of the “basic architecture” of the program: strengthening conditionalities monitoring, fine-tuning targeting, expanding coverage to reduce errors of exclusion, and enhancing oversight and controls; and • Possible innovations for the graduation agenda, including: (a) enhancing educational conditionalities (via bonuses for grade completion and graduation and incentives for older children to attend school); and (b) linking BFP beneficiaries to complementary services.3 Acknowledgements The report is the product of a World Bank research program (the “BRASA” Program) led by Kathy Lindert with contributions from Jason Hobbs, Anja Linder, and Bénédicte de la Brière. The team would also like to thank Ademildes Dantas, Christine Weigand, Carla Zardo, Fabiana Imperatriz, Marize de Fatima Santos, Lerick Kebeck and Cassia Miranda for their contributions. The World Bank is honored to have had the opportunity to serve as partners to the Bolsa Família Program, and the team would like to acknowledge our appreciation of the long-standing support and collaboration provided by officials in Brazil’s Ministry of Social Development (MDS). We are consistently impressed by their dedication, professionalism and technical excellence. They have truly been “running a marathon at a sprinter’s pace” in the design and implementation of the BFP, and we appreciate their patience in helping us try to “keep up” with them. We have also greatly appreciated the professional collaboration with officials in the Ministry of Education (MEC), Ministry of Health, Ministry of Planning, Ministry of Finance, TCU, CGU, Ministério Público, Caixa Econômica Federal, and Senators Cristovam Buarque and Eduardo Suplicy. We would also like to thank officials from the municipalities of Belo Horizonte, Nova Lima, Niterói, Aracaju, Rio Branco, São Paulo, Teresina, Uberaba, Recife, and Formosa and from the state of Acre and the Federal District for sharing their innovative experiences with the BFP with us. Finally, we are grateful to endless patience and support from the peer reviewers to the research program (the “BRASA”): Margaret Grosh and Pedro Olinto, both of the World Bank, as well as to Francesca Bastagli and the team in MDS for their comments on an earlier version of this paper. The findings, interpretations and conclusions expressed in this paper are entirely those of the authors, and do not necessarily represent the opinions of the World Bank, its Board of Directors or the countries it represents. Contacts: [email protected], [email protected], [email protected], [email protected] Page I. Introduction……………………………………………………………………… 6 II. Perceptions and Origins of Conditional Cash Transfers in Brazil………………. 9 A. Perceptions of Poverty and the Role of CCTs in Brazil……………………... 9 B. Origins and Evolution of Early CCTs in Brazil (1995-2003)……………….. 10 C. Consolidating CCTs: the Bolsa Família Reforms (2003-2006)……………... 13 III. Basic Design Parameters of the Bolsa Família Program………………………… 15 IV.
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