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When to Use a Cct versus a Ct Approach?

Following initiation of Progresa in Mexico in 1997, there has been an extraordinary proliferation of conditional cash transfers (CCT) programs oriented at social protection across the world. At the Third International Conference on CCT, the World Bank identified programs in progress in 20 countries, with a total annual budget of US$8.25 billion (World Bank, 2006). Many other countries are showing interest in using the approach, as adapted to their particular objectives and circumstances. In spite of this, there remains considerable debate, and some confusion, over when the approach should best be used over competing methodologies. Most particularly, a key aspect of the debate is whether cash transfers (CT) to poor households with children should be made conditional upon a pre-specified behavior by beneficiaries, thus becoming a conditional cash transfer (CCT). To derive maximum benefit from a transfer program, while avoiding disillusions with misplaced expectations about what it can achieve, it is important to clarify what is the true objective of the transfers, and to assess what are the benefits and costs of each approach.