CONDITIONAL CASH TRANSFERS: FOR PUBLIC GOOD OR PUBLIC VOTES?

UNCLAS BOGOTA 003984 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: SOCI ECON PREL CO SUBJECT: CONDITIONAL CASH TRANSFERS: FOR PUBLIC GOOD OR PUBLIC VOTES? ¶1. (U) Summary. Colombia's conditional cash transfer program, called "Familias en Accion", receives notable support and praise from the international financial institutions. The World Bank highlights that Familias en Accion significantly contributes to poverty alleviation and equity of opportunity and peace. Critics of the program, such as former President Pastrana, claim that President Uribe is using the program and its subsidies to increase his chances of reelection. The GOC maintains that the program has reduced malnutrition and child labor rates as well as improved vaccination rates, poor families' consumption of basic household goods, and school attendance. End Summary. -------------- Overview -------------- ¶2. (U) The Familias en Accion conditional cash transfer program began in 2001 under President Andres Pastrana (1998-2002) with the support of Plan Colombia, the Inter-American Development Bank (IDB) and the World Bank (WB). The program offers low-income families (approximately the bottom 15 percent) subsidies, i.e. cash transfers, to improve the nutrition and education of their children. ¶3. (U) Initially the program only reached 300,000 families, but the Uribe administration widened it to currently reach 2.4 million families in more than 1,000 municipalities and in each of Colombia's 32 departments. The GOC's goal is to reach 3 million families by mid-2010. The program forms part of the government's assistance to internally displaced persons (IDPs) -- an estimated 350,000 families that suffered forced displacement. The GOC plans to channel an additional 100,000 IDP families into the program in ¶2010. The GOC budgeted over US$ 2 billion for the program to cover the period between 2006-2010. ¶4. (U) Familias en Accion also supports the government's extreme poverty reduction strategy "Juntos." This program aims to provide integrated assistance in nine areas: identification/documentation, income and employment, education, health, nutrition, habitat, family dynamics, assistance distribution, and access to justice. Under Juntos, social workers monitor families living in extreme poverty, referring them to the government's various programs -- including Familias en Accion -- depending on needs. -------------- --- Critics Say It is a Political Tool to Gain Votes -------------- --- ¶5. (SBU) Familias en Accion is run out of Accion Social, the government's social programs agency in the Office of the President. The program, however, has come under criticism from Uribe's opponents. Former President of Colombia Andres Pastrana views the program as a political tool for Uribe to garner more votes for his potential reelection. He stresses that the program requires special oversight. Today's presidential candidates complain that the program is a form of charity from the President's office for roughly five million Colombians, who presumably believe that Uribe himself is doling out the money, which in the end will earn him more votes (provided the referendum allowing a third term goes forward). ¶6. (SBU) Opposition Liberal Party Senator Cecilia Lopez also stressed that the program is not adequate to fight poverty and that the GOC should provide jobs to the poor instead of money. Alejandro Gaviria, Dean of the Economic School of los Andes University, argues that this cash transfer program increases unemployment and the fiscal instability of the Government. ¶7. (SBU) Senator Lopez Montano told the press that the program should be temporary, focused, and depoliticized, and he accused Uribe of doing the opposite -- creating a massive and politicized program. Critics also accuse the GOC of arbitrarily expanding and setting beneficiary targets, rather than basing them on poverty statistics or expressed need. -------------- The Multilaterals Defend the Program -------------- ¶8. (SBU) Since its inception, Familias en Accion has had the support of multilateral institutions, which have replicated similar programs in Mexico (Programa Progreso),Brazil (Bolsa Familia) and elsewhere. Representatives of the IDB and World Bank expressed to EconOffs their support of Colombia's conditional cash transfer program and discarded the "vote-getting" argument as political noise. ¶9. (SBU) Polly Jones, Principal Operations Officer at the World Bank, told EconOff that the Bank is currently supporting the program with four loans, and positive findings from its evaluation in 2005 led to an expansion of the program. The Bank highlights the gains in poverty alleviation and equity of opportunity and peace. Familias en Accion, according to the Bank, is credited with helping eradicate extreme poverty, reducing spatial differences in poverty, strengthening the social safety net system, and removing access barriers to education and health services in high conflict zones. ¶10. (SBU) Ana Lucia Munoz, specialist in Social Development at the IDB, noted the program was conceived as a temporary policy to face the economic crisis of 1999. However, the positive results of the program convinced the IDB to continue supporting Familias en Accion with two additional loans. The IDB is now in the process of preparing a third loan for Colombia's highly-commented, conditional cash transfer program. -------------- GOC's Position -------------- ¶11. (SBU) Juan Carlos Caiza, Presidential Adviser for Departments and Municipalities, told EconOff that the Uribe administration has followed the direction of Juan Carlos Echeverry, the designer of the conditional cash transfer program during Andres Pastrana's presidency. Caiza added that Luis Alfonzo Hoyos, former Director of Accion Social, was a technocrat who had administered the program without the use of political criteria. Caiza stressed that this program will continue after Uribe's term, as it did after Pastrana's, because the results are positive. -------------- Results of Familias en Accion -------------- ¶12. (U) According to the GOC's evaluation, consumption of basic household goods, such as clothing, school supplies and transport, increased between 15 and 19 percent. Children consumed 1.2 times more protein on average than without the program. Chronic malnutrition in children living in rural zones decreased by 10 percent. Immunization rates among rural children increased by 12 percent. School attendance rates rose by 12 percent in rural areas, and by 6 percent in urban areas, where attendance was already higher. Child labor (for 10-13 year-olds) decreased by 6 percent in rural areas and reduced the intensity of the workday of 14-17 year-olds in urban areas (while work by their mothers increased). -------------- Comment -------------- ¶13. (SBU) The qualification criteria appear objective and there is no evidence that the program has been manipulated for political purposes. In certain districts, beneficiaries of the program voted against Uribe in 2006, and those families are still receiving their cash transfers. However, separating the program from the Office of the President would demonstrate a higher degree of transparency. NICHOLS