Education and health sectors enlisted to verify compliance
Testing of innovative ways to deliver payments
Reforming Cash Transfers to Effectively Fight Poverty in Honduras
One of the most important tools to combat poverty in Honduras is providing poor households with cash payments in exchange for meeting certain conditions, such as having regular health checkups and sending their children to school.
Honduras has worked for several years with the IDB to implement these programs, which are known as conditional cash transfers (CCTs). And the programs have achieved results:a recent review of CCT interventions in Honduras showed an 8 percent increase in school enrollment and 3 percent decline in child labor among participating households when compared with groups that did not receive cash payments.
After combining different types of cash transfer schemes into a single national program known as “Bono 10,000,” Honduras expanded its poverty alleviation efforts in 2010 by increasing the amount of payments and expanding the number of eligible households. Overall, the CCT initiative has benefited more than 210,000 households, or 40 percent of the country’s population living in poverty.
However, the rapid expansion of these programs has posed operational challenges that Honduras is now working to address. With support from the IDB, Honduras is setting up a more cost-effective organizational structure that can generate and manage household information and payments and deliver cash transfers in a timely fashion. Also, for the first time, the consolidated CCT program has enlisted the education and health sectors to systematically verify whether beneficiaries are meeting their conditions.
In order to ensure that households are complying with the program’s conditions, the country is upgrading its information systems and improving collaboration between the health and education departments so they can routinely share information on program beneficiaries.
In addition, the program is working to stabilize the payment cycle so that households receive their transfers every two months. Clear and predictable regular payments will allow households to better plan expenditures and use the cash payments to cover their most basic daily needs, potentially improving the effectiveness of the program.
The country will also test innovative ways to deliver payments to beneficiaries by using state bank branches, mobile phones, and local cooperatives. Results from these pilot projects will be assessed through a rigorous impact evaluation so as to glean important lessons for Honduras and other countries seeking to scale up their CCT programs.
By working to overcome the operating challenges faced by its CCT programs, Honduras is setting the foundation for a sound large-scale social protection program that will help break the poverty cycle that today afflicts millions of its people.