The Global Assets Project at the New America Foundation recently released a new brief, produced in conjunction with Proyecto Capital, on whether savings-linked conditional cash transfers (CCTs) are helpful in reducing poverty by facilitating asset accumulation and increasing the financial inclusion of the poor.
The arguments for CCTs include that they are highly scalable and easily adaptable to a variety of goals and contexts. In conjunction with technological and programmatic innovations, they are becoming easier to deliver. The concept of linking CCT delivery to the formal financial system is gaining ground: for instance, the Colombian government is planning to link its CCT programs to savings accounts with the aim of increasing financial inclusion. The Assets Project policy brief examines existing savings-linked CCT initiatives, including the “Youth with Opportunities” project in Mexico that makes use of savings accounts to deliver cash transfers that encourage youth to complete additional years of schooling.
The brief was launched with a panel discussion featuring experts in financial inclusion and social protection – Michelle Adato (IFPRI), Mark Pickens (CGAP), Marguerite Robinson, and Luis Tejerina (IADB). I attended, and highly recommend listening to the summary podcast or watching the webcast of the full session and question and answer session. The discussion was excellent.
In terms of positions, none of the panelists questioned the basic premise of the paper – there was baseline agreement that CCTs have a place in poverty alleviation and reduction, and that increasing the financial inclusion of the poor is an important goal. As always, the devil is in the details: questions arose about whether the formal financial system is ready and able to serve poor clients effectively and whether the poor understand how to use bank accounts to their advantage. Education seems to be a clear need: education in financial literacy for the poor, and education in how to reach the poor profitably for banks.
There was also discussion of the need to educate practitioners – several panelists identified critical gaps between the economic development and social protection fields in their approach the poor and their respective perceptions of the capacity of poor households to save and build assets. This issue in particular struck me because of similar challenges in the field of market-driven economic strengthening for children and youth – effective cross-sectoral communication is difficult when practitioners are operating from very different perspectives. The point was raised during the discussion, but we sadly did not get into how to address or overcome it.
Since we have a forum for discussion here, I thought I might ask the CYES Network – what has your experience been with cross-sectoral communication? What are the frustrations? What are the rewards? What is your advice on how to approach it?
