Bolsa Familia and Brazil’s Future

“There is no doubt that Bolsa Família has been transformative,” Deborah Wetzel, an economist in the Latin America sector at the World Bank who has worked closely with the Bolsa Família administrators, said proudly at the Woodrow Wilson Center in Washington, D.C., on January 29, 2014.

Teresa Campello, Brazil’s Minister of Social Development and Fight against Hunger, spoke with passion and pride for over an hour, explaining away common criticisms and extolling the program’s successes.

And she has much to brag about. Bolsa Família, which received much attention as it hit its 10 year mark in 2013, is a program through which the Brazilian government transfers small amounts of cash — enough to help them live above the poverty line as defined bythe Millennium Development Goals – to families on the condition that their children attend school with an 80 percent frequency. Indeed, the results are impressive. Brazil has cut extreme poverty in half over the last ten years and lowered its Gini coefficient, a measure of inequality, by 15 percent.[1] The country’s poorest regions, the Northeast and the North (which contains most of the Amazon Rainforest), have benefited the most.

A Path to Health and Education Gains

Minister Campello highlighted improvements in health among Bolsa Família participants:

• 99.1 percent of infants get vaccinated.
• The ten year period saw a 14 percent reduction in premature birth rates.
• Fewer babies are born underweight.
• There was a 58 percent decrease in malnutrition mortality rates,
• And a 46 percent decrease in diarrhea mortality rates.

Some of the improvements are less quantifiable. Schools are providing more nutritious meals to their students, an additional incentive for students to attend, and more consistent attendance pressures teacher to meet the demands of a more responsive class.

The gains in education Minister Campello emphasized are equally impressive, and it is easy to imagine how a new, larger generation of healthier students and workers will benefit Brazil:

• Students whose families are part of Bolsa Família attend high school at a higher rate than their peers outside of the program.
• Students at age 15 are more than 20 percent more likely to be in the appropriate grade level now than they were ten years ago – a rate of improvement much higher than the national average.
• The dropout rate is lower among Bolsa Família students than the national average.

Similar to the lending terms of the Grameen Bank (the Indian microfinance pioneer), the recipients of the cash transfers are almost exclusively (9 in 10) women. They are more likely to focus on the needs of the entire household. The program is also celebrated for its ease of use. The funds are transferred through cards, which work just like ATM cards: Bolsa Família participants can withdraw cash and spend it at their discretion.

Wetzel, the World Bank economist, commended Campello’s team for the unique quality of its leadership and for the “quality and rigor” of its technical team. She noted there are three unique aspects of the program: (1) there have been consistent on the ground results, (2) it was implemented with several technical innovations, (3) the experience is scalable and translatable across the globe.

Mapping Poverty, Translating Techniques

For the future, the single most important part of the program is the data it has collected. Through Cadastro único, (Single Registry) the program’s administrators have details of how and where its registrants live. The resulting “poverty map,” which represents data for one-third of all Brazilians, will help better target poverty alleviation initiatives going forward. Bolsa Família, as President Lula and others have said, generates economic growth. For every $1 put in, the program produces $1.78 in GDP.  Campello and Wetzel stress that for this reason the program is not charity. The program benefits all Brazilians. And with the data incorporated into the “poverty map,” those benefits should only grow and further multiply.

One of the most encouraging aspects of the poverty alleviation program is that it is scalable and translatable. Brazil has seen results in urban centers and drought-laden rural areas, and other countries have had success implementing similar strategies. In fact, the concept originated in Mexico under the Deputy Minister of Finance, Santiago Levy, who is now Vice President for Sectors and Knowledge at the Inter-American Development Bank.

A “Fragile” Future?

What no one mentioned was that this period of success, from 2003 – 2013, coincided with one of the largest commodity booms that Brazil has experienced. Brazil’s economy, heavily dependent on exporting commodities like soy to China and the United States, grew tremendously. No matter what, Brazil’s poor are better off than they were a decade ago. But what happens when the boom stops? Or even slows? Brazil is part of the “Fragile Five,” a group of emerging economies marked by worrisome dependence on foreign investment.[2]  Brazil has invested heavily in public infrastructure investments, especially in the lagging North and Northeast. But efforts continue to be inadequate in light of the pace of regional growth; when compared with countries with similar growth rates, Brazil’s infrastructure investment efforts are second-rate, in part, according to the Financial Times, because of the government’s poor ability to execute.[3] Unlike the team that runs Bolsa Família, who is doing a lot with a little, Brazil has sacrificed quality to quantity as it tries to build railroads, ports, and roads, especially across the North and Northeast – the same two primary targets of Bolsa Família.  Similarly, quality of public education, especially at the K-12 level, continues to be generally poor. What good are higher attendance rates if classes are vapid?  Or if area around schools are plagued by violence?

There is no doubt the Brazilian government has made major inroads in alleviating the previously taken-for-granted poverty in Brazil through Bolsa Família. After ten years of improvements, the successes are worth celebrating. Extreme poverty is all but eradicated, bolstering the economic resiliency of those poorest families. Still, major macroeconomic setbacks, and other development issues like education and violence, will hurt a decade-old success story, one that has implications for millions families. If Brazil can decrease its foreign dependence or if, as they have been until now, commodities still continue to be consumed worldwide at high rates, Brazil’s next generation – including, for once, its poorest – will be off to a strong start.

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