Brazil
Happy families

Feb 7th 2008 | MACEIÓ
From The Economist print edition

An anti-poverty scheme invented in Latin America is winning converts
worldwide

MENTION globalisation and most people think of goods heading across the
world from East to West and dollars moving in the other direction. Yet
globalisation works for ideas too. Take Brazil's Bolsa Família ("Family

Fund") anti-poverty scheme, the largest of its kind in the world. Known in
development jargon as a "conditional cash transfer" programme, it was
modelled partly on a similar scheme in Mexico. After being tested on a vast
scale in several Latin American countries, a refined version was recently
implemented in New York City in an attempt to improve opportunities for
children from poor families. Brazilian officials were in Cairo this week to
help Egyptian officials set up a similar scheme. "Governments all over the
world are looking at this programme," says Kathy Lindert of the World Bank's
office in Brasília, who is about to begin work on similar schemes for

Eastern Europe.

Bolsa Família works as follows. Where a family earns less than 120 reais
($68) per head per month, mothers are paid a benefit of up to 95 reais on
condition that their children go to school and take part in government
vaccination programmes. Municipal governments do much of the collection of
data on eligibility and compliance, but payments are made by the federal
government. Each beneficiary receives a debit card which is charged up every
month, unless the recipient has not met the necessary conditions, in which
case (and after a couple of warnings) the payment is suspended. Some 11m
families now receive the benefit, equivalent to a quarter of Brazil's
population.

In the north-eastern state of Alagoas, one of Brazil's poorest, over half of
families get Bolsa Família. Most of the rest receive a state pension. "It's
like Sweden with sunshine," says Cícero Péricles de Carvalho, an economist
at the Federal University of Alagoas. Up to a point. Some 70% of the
population in Alagoas is either illiterate or did not complete first grade
at school. Life expectancy at birth is 66, six years below the average for
Brazil. "In terms of human development," says Sérgio Moreira, the planning
minister in the state government, "Alagoas is closer to Mozambique than to
parts of Brazil." Vote-buying is rife: the going rate in the last election
for state governor was 50 reais. "People come to us complaining that they
sold their vote to a politician and he hasn't paid them yet," says Antônio
Sapucaia da Silva, the head of Alagoas's electoral court.

As well as providing immediate help to the poor, Bolsa Família aims in the
long run to break this culture of dependency by ensuring that children get a
better education than their parents. There are some encouraging signs.
School attendance has risen in Alagoas, as it has across the country, thanks
in part to Bolsa Família and to an earlier programme called Bolsa Escola.
The scheme has also helped to push the rate of economic growth in the poor
north-east above the national average. This has helped to reduce income
inequality in Brazil. Although only 30% of Alagoas's labour force of 1.3m
has a formal job, more than 1.5m of its people had a mobile phone last year.
"The poor are living Chinese rates of growth," says Aloizio Mercadante, a
senator for São Paulo state, repeating a proud boast of the governing
Workers' Party.

Look hard enough and it is also possible to find businesses spawned by this
consumption boom among the poor. Pedro dos Santos and his wife Dayse started
a soap factory with 20 reais at their home in an improvised neighbourhood on
the edge of Maceió, the state capital. With the help of a microcredit bank,
they have increased daily output to 2,000 bars of crumbly soap the colour of
Dijon mustard. Nearby, another beneficiary of a microfinance scheme has
opened a shop selling beer, crisps (potato chips) and sweets. On the shop's
wall hangs a reminder that the state's politics will take longer to change:
a campaign poster with the slogan "Collor: the people's Senator". Fernando
Collor was forced to resign as Brazil's president in 1992 after his campaign
manager ran an influence-peddling racket. In his home state of Alagoas,
though, Mr Collor's political career is thriving.

Despite the early success of Bolsa Família, three concerns remain. The first
is over fraud. Because money is paid directly to the beneficiary's debit
card, there is little scope for leakage. The question is whether local
governments are collecting accurate data on eligibility and enforcing the
conditions. Some 15% of municipal councils make the improbable claim that
100% of pupils are in school 100% of the time. Despite this, most of the
money does go to the right people: 70% ends up in the pockets of the poorest
20% of families, the World Bank finds.

Second, some people worry that Bolsa Família will end up as a permanent
feature of Brazilian society, rather than a temporary boost aimed at
changing the opportunities available to the poorest. Whether this happens
will depend largely on whether Brazil's public schools improve fast enough
to give all their new pupils a reasonable education. Since the scheme began
on a large scale only in 2003, it is still too early to tell.

Third, Bolsa Família is sometimes equated with straightforward vote-buying.
That is unfair. Luiz Inácio Lula da Silva's name is strongly associated with
the scheme—even among some people in Alagoas who are unaware that he is
Brazil's president. But their gratitude does not extend to support for his
Workers' Party. There are signs that mayors who administer the programme
well get a reward at the polls while those who do not suffer. For a
relatively modest outlay (0.8% of GDP), Brazil is getting a good return. If
only the same could be said of the rest of what the government spends.