Brasil's President Lula: The First Brasilian President To Help The Poor

Bolsa Família scheme: Income support makes a real difference
By David White
Published: November 4 2009 16:29 | Last updated: November 4 2009 16:29

Benefits of the Bolsa Família: recipients watch the president on television. The scheme also encourages school attendance
Geová da Silva Lima lives with his wife and three children in two small rooms with bare brick walls in a rough, crime-ridden area of Recife, in northeast Brazil. The living room has a battered television and a stove. There is a bathroom but no running water.
After a series of short-lived jobs, he has had no fixed work for well over a year. But the government’s family grant programme, Bolsa Família, a scheme that in the past five years has helped to lift millions of Brazilians out of the most extreme poverty, now provides a small regular income.

The R$114 (US$65) monthly payment is enough to buy beans, rice, eggs and sausage, but the family rarely gets to eat fresh meat. “Brazilians,” Geová explains philosophically, “learn to live with certain difficulties.”

As a condition of the grant, the two-year-old daughter has to be taken for regular health checks, and the two boys, aged 10 and 12, have to show at least an 85 per cent school attendance record. “I think it’s a good idea. It helps to get those who are out of school to return,” Geová says. There is a school close by, and a health centre, even though it does not have a doctor.

The Bolsa Família, the flagship social programme of President Luiz Inácio Lula da Silva’s government, was created by amalgamating and expanding income support schemes started under the previous administration. Comparable with Mexico’s longer-running Oportunidades programme and other schemes in Chile and Colombia, it is designed to widen access to healthcare, education and welfare. While the cost is relatively modest, less than 1 per cent of the national budget, it has become the biggest scheme of its kind providing conditional cash transfers, affecting about a quarter of the 190m population.

According to a recent study by Ricardo Paes de Barros, an economist at the government’s Institute for Applied Economic Research (IPEA), the income of the poorest 10th rose at an annual rate of 8.1 per cent between 2001 and 2008, more than five times the rate of increase for the top decile.

Driven largely by cash transfers and higher basic wages, this not only represented a significant redistribution of income but brought other benefits such as improved education levels and reduced child mortality. The study found that poverty had fallen from 39 to 25 per cent of the population since 2003 and the rate of extreme poverty had halved to below 9 per cent.

Parallel research by the Centre for Policy Studies at the Getúlio Vargas Foundation (FGV) concluded that 32m Brazilians had moved up into the A,B and C income categories – with household incomes above R$1,115 ($652) a month – in the past five years, including 6.7m last year alone.

Figures from six big cities indicated that the consumer middle class kept on growing despite the recent recession, although more slowly, with an increase of almost 2 per cent in the year to July.

Karla Menezes, social welfare secretary at Recife town hall, says R$12m a month is being paid to local family grant beneficiaries through the Caixa Econômica Federal state bank, all of which goes into the local economy.

A third of families in the city have been registered, although the money available does not yet stretch to cover them all. Some 40,000 families, a quarter of those eligible, have yet to be brought into the scheme.

Stringent efforts are made, she says, to ensure the conditions are met, and as many as 25,000 families in Recife currently have payments temporarily blocked.

Recipients are issued with a plastic card enabling them to draw the payments at cash machines The money is almost always paid to the woman in the family, strengthening the place of women at both household and community level. Roughly half of the total goes to the northeast, the poorest region.

The government says it is supporting about 12m families through the programme, out of almost 13m reckoned to qualify. Payments range from R$22 to R$200 a month. All with monthly income of R$140 or less per head are entitled to support, and those in a lower income bracket of up to R$70 per head qualify for a basic payment in addition to payments made according to the number of children. The scheme was expanded last year to include 16- and 17-year-olds.

Means-testing is complex, especially since many are engaged in informal activities. Data are cross-referenced at national level to limit fraud.

Camile Mesquita, director for the management of income transfer programmes at the Ministry of Social Development and Fight against Hunger, rejects the idea that this level of support risks creating dependency. The aid, she says, is designed only as a transitional cushion to help families towards financial autonomy. “The Bolsa Família is for many people the first security they have had.”

The programme is backed up by provisions for microcredit and training, and the government aims to get 200,000 people from these low-income families into jobs in construction and tourism. Seeking work is not, however, a condition of benefit.

“A lot of people don’t want to take up the courses for fear of losing the assistance,” says Geová in Recife, who has just completed a building and decorating course and wants to start another. For him, a permanent job is the only solution. In the interim, the grant provides the family’s only fixed income.

“It is not enough,” he says. “But it is vital.”