What would Robin Hood do: How cash handouts are remaking lives in Brazil

RIO DE JANEIRO — The Globe and Mail

The mean streets of Complexo da Mare, a favela in north Rio, where the Bolsa Familia provides social aid to poor families. (Lianne Milton for The Globe and Mail)

Ten years ago, Brazil set out to do something that few countries have ever overtly attempted: become more equal. The undertaking was unusual, but even more remarkable was the outcome: measurable success. Brazil has in the past decade moved people out of poverty on an unprecedented scale – the standard of living improved so much for 22 million that they are no longer considered “poor.” Millions more living on the knife-edge of starvation in drought-ridden expanses of the interior are still poor but vastly better off. Between 2003 and 2009, incomes of the poorest Brazilians grew seven times those of rich citizens.

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And how did Brazil help? It gave its poorest citizens money.

It’s an idea that was once anathema to development experts and economists, and which is still deeply unpopular in many quarters – witness the hostility to “welfare moms” in the developed world. But the effectiveness of giving money to poor people to make them less poor is supported by mounting evidence as a smart way to address poverty. Sixty-three countries have sent experts here to learn about the Bolsa Familia the family grant.

Brazil’s is not the biggest anti-poverty program in the world – it is dwarfed by several in South Asia, such as India’s $70-billion guaranteed-income-for-work scheme, for example.

And it is not the only one to use cash transfers, which are done on a moderate scale in India, on a larger one in South Africa, and which exist in some form in dozens of developing countries today, run either by the state or by private aid organizations.

What makes Brazil’s program stand out is the rock-solid evidence of the many ways this program has served to remake, dramatically, the lives of millions of people over the past decade.

Teresa Campello, who heads the Ministry of Social Development and the Fight Against Hunger – and who projects an electric enthusiasm for her job difficult to imagine in a Canadian cabinet minister – rattles off the statistics: Infant mortality has fallen by 40 per cent in 10 years – one of the most dramatic declines ever seen anywhere – and the fall is sharpest in poorest areas; school enrolment sits at nearly 100 per cent, and kids who get the grant now graduate at nearly twice the rate of kids who don’t; research shows that women given the grant have greater decision-making power and more equitable relations with their partners, if they have one.

And at a time when Brazil’s economy was booming – traditionally a guarantee that the gulf between rich and poor would get even wider – inequality, for the first time ever, declined. Brazil went from being the world’s third most unequal country to the 15th between 2001 and 2012.

Ms. Campello, whose ministry was created to oversee anti-poverty programs, says a key to the Bolsa Familia success was the fact someone had a personal stake in it: Brazil’s former president.

Shortly after Luiz Inacio da Silva – known universally by the nickname Lula – was elected president on an overtly socialist platform in 2002, he united a number of anti-poverty initiatives undertaken by the previous, right-wing, government, including a payment to parents for keeping kids in school, into a national system. He called it the Bolsa Familia and he told Brazilians, “You do not owe anyone anything for this: this is your right as a citizen of this country.”

“We were lucky we had a president who was poor,” Ms. Campellos says. “Not poor – very poor. He went hungry. And he had a mother who ... decided that her children weren’t going to be poor, that they would study. And she raised wonderful children, who lived in poverty and left poverty. All of them.”

The president thought about his mother, she says (and, no doubt, the father who abandoned his eight children for a new wife, had as many children with her, abandoned them, too, and drank himself to death). Mr. Da Silva worked full-time at age 8 and taught himself to read a few years later). He told his staff, ‘A poor man has only his name as collateral,’” says Ms. Campello, and will use money wisely.

“This thing about being suspicious – ‘Oh, you have to supervise poor people because they will spend it wrong,’” she says. “That is just not true.”

As his staff debated what their big anti-poverty program should look like, the president weighed in: It would be a cash grant and it would go to the woman in each family, to increase the chances of it being spent on children. Those two factors, Ms. Campello said, lie at the core of its success.

Dropouts pay the price

The grant is what economists call a “conditional cash transfer.” To get it, families have to enroll, bring their children to public health centres for regular checkups and vaccinations, and keep those kids in school until they finish high school. If a student drops out – once a huge problem in Brazil – then the per-person grant for that child is cancelled.

To enroll, a family has to fill out an exhaustive questionnaire – What is the floor of your house made of? What do you eat? How do you cook it (coal, charcoal, electricity?) – and are assigned a social worker. The grant lands in the bank account of the designated women in each family each month; she has a government-issue debit card to withdraw it. Today, 50 million Brazilians receive the grant – one quarter of the population.

The price tag, however, is astonishingly modest: just 0.46 per cent of GDP, for a total of $11.5-billion this year. (This means that, despite the slowdown in Brazil’s economy, the program isn’t threatened.) Overhead is kept to a minimum – there is no food to move around, as there was in previous nutrition programs that were meant to deliver needy families ration packs, and which were vulnerable to immense amounts of corruption.

And once the national registry was in place, there wasn’t much infrastructure to worry about. The grant isn’t a lot of money, but it is a guaranteed amount, so it allows people to make plans, and sometimes to save – two luxuries the poor never had relying on uncertain work and surviving day-by-day. It taught a new level of financial literacy, Ms. Campello says, to people who had never before had any prospect of regular income to budget with.

She calls it an investment. “These millions of people who get the Bolsa Familia are people who are spending here in Brazil. This money multiplies the GDP. We want them as consumers, as part of the country. And as workers. Brazil needs these workers. So we are not doing this just for social assistance. We are doing this because we believe it’s good for the country.”

The program has critics, especially in the middle and upper classes. They deride it – on television chat shows, in cafe conversations – as handouts that will “make people lazy” and give them licence not to seek work.

“The general public continues not to like to give money to poor people,” says Sonia Rocha, an economist with the Institute for the Study of the Labour Market and Society, who has evaluated the impact from the outset. “People don’t think it’s effective despite the evidence.”

In fact, 75 per cent of adult recipients work, and most of those who don’t are in areas that lack employment prospects. Ms. Campello loves this statistic. “Fifty per cent of the people who get the Bolsa Familia don’t work. That’s true. You know why? Because they’re under 14 -- we don’t want them to work! Half of the extremely poor people in this country are children!”

Ultimately, the great bulk of population supports the program – and the Workers’ Party government. Mr. Da Silva’s hand-picked successor as president, Dilma Rousseff, champions the Bolsa Familia as enthusiastically as he did and is talking it up ahead of her bid for re-election next year.

And indeed, Dr. Rocha noted, even if a new conservative government were elected, it would not be able to cut the program, such is its popularity.

Still, some of those who study the Bolsa Familia say it is getting more credit than is entirely fair. Lena Lavinas, a professor of economics at the Federal Universal of Rio de Janeiro who has evaluated many aspects of the program, argues that much of what the government attributes to the family grant likely would have happened without it. Brazil’s economy took off at the start of the last decade, posting growth rates of eight and nine per cent a year. That growth created 21 million new jobs from 2001-2012.

The Lula government also pushed a steady increase in the minimum wage – Mr. Da Silva rose to power through the country’s trade unions and never left his base far behind. Minimum wage, which 17 per cent of Brazilians earn, has risen 72 per cent in real terms since 2002.

Brazil’s poorest people are landless farmers, but agricultural industries have undergone the fastest industrialization, creating a vast demand for semi-skilled labour. Urbanization, meanwhile, has been rapid, and there were new jobs and better health-care and education in the cities. And while all of this was happening, Prof. Lavinas notes, Brazil was experiencing the tail end of a major demographic shift. Fertility has declined from an average of 6.8 children per woman in 1960 to 1.8 children today.

“Everything converged to make the Bolsa Familia appear like a miracle,” she says. “It’s not.” The poverty line is “ridiculously low,” she adds – many of those who now count as no longer poor are still living on the economic margins. And children are in school, but school, teacher and student performance remain abysmal.

Can the concept travel?

But others have come to a different conclusion. Kenneth Camargo, a professor of public health at Rio de Janeiro State University, says there is indisputable evidence – published in The Lancet and The American Journal of Public Health, among others – that the program had direct impact on child and infant mortality. Previous rises in income or job booms never caused them to budge, he says.

What is less certain is whether the program can be transferred to other countries. The design is simple, easily replicated and scaled up, and the vast database makes it easy to track families and their well-being. But it may be unrealistic to think poorer nations can replicate its success. Few have Brazil’s level of penetration of financial services, or smooth and secure electronic banking that allows the benefit to be seamlessly deposited in millions of accounts each month. Few have an economy that has shown the growth rate or the vast economic potential of Brazil’s extractive and agricultural industries. Few have the capacity to deliver that Brazil’s comparatively functional federal government has. And few will have the collective political will to push through a program like this, as Brazil did a decade ago.

“These conditions are rarely available ... and frankly it alarms me that people want to copy this program,” Dr. Rocha says.

For Prof. Camargo, the public health expert, that’s missing the larger point. The true miracle of the program is what it says about how Brazil is defining itself as a place that must be more equal.

“A critical mass of people was invested in the idea of reducing inequality … It wasn’t an overtly discussed social contract, but it was a zeitgeist. There was public support for this. For the state to have a direct role in this. And there still is.”

The ‘other’ Rio

Complexo da Mare is a vast cement sprawl on the edge of Rio, home to 130,000 people. Its streets are controlled by skinny boys in shorts and flip-flops, dwarfed by the machine guns they carry. Crack cocaine is sold in neatly labelled packages on tables in the roads. Young men in plastic chairs in the lanes drink beer and fondle the pistols that lay in their laps; young women with pregnant bellies and faces preternaturally aged by drugs stumble past them. This is the other Rio, the one that doesn’t appear in the ads for the “Olympic City.”

Eliane Antunes, 57, is raising her four grandchildren in the middle of it. Her eldest daughter is addicted to crack and, after years of erratic attention to the children, finally disappeared to live on the streets three years ago; their father hasn’t been in touch in years. Ms. Antunes earns $340 a month working five-and-a-half days a week as a cleaner. And since she took over care for the kids, she receives another $155 a month in a Bolsa Familia grant. “You put it together, and you can just manage,” she says.

The big difference is in what she can feed the children. “Now they get milk and meat.” The effect of a few years of steady nutrition is visible in the difference between the children: the older boys are skinny and have pocked, scarred skin; 12-year-old Adriel is the size of a seven-year-old. Only the youngest, Edilaine, 6, who was young enough to catch up when she started to be well fed, is a typical size for her age; her hair is glossy and her skin clear.

The oldest boy, Wenderson, 14, left school this year – upset about his mother, Ms. Antunes said, and he’s always struggled in the classroom. The grant for him was cut off, and she feels it. “I still have to feed him.” She’s trying to get him back into school.

The Bolsa Familia means the kids get school supplies, she said. “And of course at the end of the year I can scrape all my money together and buy them a Christmas present. I buy on instalments, so it takes a long time to pay for it. But if I don’t, no one is going to buy them presents, ever.”

Ms. Antunes left school at 14 to start work as a maid; her own kids left even younger, for factory jobs, because the family needed the cash.

“I want my grandchildren to have a better life: they have dreams. One wants to be a firefighter, one an electrician. I couldn’t dream like that for my own children, I needed them to help me. This is better.”

Stephanie Nolen is The Globe’s South America correspondent.

Follow on Twitter: @snolen

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