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For poor families in the developing world, the cost of providing their children with adequate nutrition, effective health care and even minimal education can be very high. Beyond the price of food, health services, medicines, school fees, supplies and clothing, the trip to the health center may cost more in time or money than parents can afford. The youngster’s labor or earnings may be too crucial to the family’s economic survival to permit time for class.  

The immediate constraints imposed by poverty thus keep countless children around the world from developing the vigor and skills that will permit them to rise economically later in their lives. Parents’ inability to make even relatively small investments in children’s futures is “a major cause of the intergenerational transmission of poverty,” according to John Maluccio of the International Food Policy Research Institute[i] To help families break out of this cycle, a number of developing countries have created programs that provide parents both the means and the incentive to give their children a better start in life through improved health care, nutrition or education. Of these, “one of the world’s most widely recognized,” according to Charity Moore of the United Nations Development Program’s International Policy Center for Inclusive Growth, is Nicaragua’s Red de Proteccion Social (RPS)—or Social Safety Net in English.  From 2000 to 2006, this “exemplary” initiative made significant impacts on the health, nutrition and educational status of some of the nation’s poorest families and achieved its notable progress “in a short time,” Moore adds. [ii] 

 

Conditional Cash Transfers (CCTs)

RPS did not merely focus on distributing benefits to the needy without conditions. Rather, it gave participating families regular cash payments, technically known as conditional cash transfers (CCTs), in exchange for carrying out certain specific acts believed to contribute to their children’s present and future welfare. These included seeing that they got periodic health checkups and attended school regularly. Parents, in addition, received information and education on diet, health care, and more.
 
Funded by the Inter-American Development Bank (IDB) and the Nicaraguan government, RPS proved, according to rigorous evaluations, “quite comprehensively that [it] has been a success,” reports the Overseas Development Institute.[iii] Evaluations of a number of CCT programs in several Latin American countries have “provided unambiguous evidence that financial incentives increase the poor’s use of key services,” write Amanda Glassman, Jessica Todd and Marie Gaardner.[iv]   RPS’s “positive and significant effects,” furthermore, covered “a broad range of indicators and outcomes,” including “substantial improvements” in the amount of health care and the quality of the diet children received, as well as “massive” increases in their school enrollment and attendance, according to Maluccio and Rafael Flores. And these effects were greatest among the poorest families. [v]
 
“Designed to address both present and future poverty,” RPS accomplished the former by providing additional income to very poor families and the latter by assuring that these resources would go to bettering children’s health, nutrition and education, note Fernando Regalia and Leslie Castro of the United Nations Millennium Development Goals Coordination and Territorialialization Unit.[vi]   Despite its name, RPS was not in fact “designed as a traditional safety net program,” notes Maluccio.[vii] It was part of an overall national strategy to reduce poverty in the long term by helping the poorest of the nation’s poor increase their investments in human capital. Paying parents for actions that improve their children’s health and education “effectively transforms pure transfers into capital subsidies for poor households,” Maluccio adds.[viii]
 
Despite its international renown and its demonstrated success, however, RPS ended in 2006.   Though praised by experts, it was “unable to garner enough domestic support to ensure its continuation,” notes Moore. It serves both, she adds, as “an example of an efficient and effective cash transfer programme” and a “warning to officials” of the need to “balance the demands of domestic and international stakeholders.”[ix] This key issue is discussed below.
 

Targeting poverty    

In 1999, when RPS was first being planned, Nicaragua was a poor nation of 4.5 million facing enormous health and educational challenges, quite apart from the ravages it had suffered the year before from Hurricane Mitch.   The “category 5 monster,” the deadliest Atlantic storm in over 2 centuries, had left 3,000 of Nicaragua’s 4.5 million citizens dead, 1,000 missing, and nearly 750,000 homeless, and much of the country’s infrastructure and crops severely damaged. [x] [xi], [xii]   Even before that, however, Nicaragua’s per capita gross domestic product was Central America’s lowest.[xiii] Infant mortality stood above 60 per 1000 births and accounted for most of the country’s premature deaths.[xiv], [xv] For every 100,000 babies born alive, meanwhile, 160 women died. Infection was widespread and malnutrition so common that a quarter of the children under 5 showed stunting. Sanitation and water supply in rural areas were “dismal.”[xvi] The average adult had a bit over 3 years of schooling.[xvii] Only about half of rural adults and youths could read or write. [xviii]

 

RPS’s goals related specifically to these deficiencies, aiming to improve nutrition by boosting participating families’ spending on food, to provide better basic health care and nutrition for their children up to age 9, to improve health care for expectant and new mothers and to raise school enrollment and attendance among children between ages 7 and 13.[xix]   Raising the poorest households’ incomes was a prominent aim, but opinion among Nicaraguan government leaders opposed provisions deemed paternalistic or “asistencialista,--that is,…that provided benefits to the poor without helping them move out of poverty, thus prolonging their dependence on institutional assistance,” Moore writes.[xx]   Benefits were designed to “address short term income constraints that households face while ensuring that [they] will invest in areas that will lead to long term growth and poverty alleviation,” she continues.[xxi] Program design also included rigorous evaluations of results, with an eye to an expanded second phase if the first proved successful.

 
 

Demand-side and Supply-side Payments

Modeled in part on a program called Oportunidades successfully pioneered in Mexico, RPS sought to influence behavior by providing cash payments to both the families receiving health and education services (so-called demand-side transfers) and the people who the provided the services (so called supply-side transfers).[xxii] The demand-side payments went to the female heads of participating poor households. Women, the program organizers believed, “are more likely than men to spend the cash in ways…more helpful to their children,” writes Moore.[xxiii] The payments were meant to remove the constraints, both direct and indirect, on using services or eating an improved diet. Before RPS, for example, families in extreme poverty had to travel three times as far, at three times the cost, to get health care as those who were not poor. Fewer than half of the one- to two-year-olds in the area that RPS would cover were current in their vaccinations. As a result, under a third of the children under three in those areas had had a health checkup in the previous six months. [xxiv] 
 

Supply-side Payments

On the supply side, RPS also gave money to participating family heads that they were required to pass on to their children’s health care providers and teachers. This not only compensated these professionals for the increased demand for their services but served as a check that the services were actually provided. Planners had correctly anticipated that RPS would produce often-sizeable influxes of new pupils into local schools, increasing teachers’ workloads and the cost of supplies. The payments also helped control teacher absenteeism, a “significant problem in rural Nicaragua,” according to Moore, because they went only to those who maintained consistent work schedules.[xxv]
 
The health personnel serving RPS families were employed by organizations holding contracts with the Nicaraguan Ministry of Health that received payment for each service they provided to participants. Monitoring procedures also tracked provision of services.   Physicians, nurses and psychologists from the ministry-approved health organizations worked in teams in the participants’ own communities, monitoring children’s growth, development and vaccinations and teaching families improved health practices and nutrition. To overcome suspicions of men who objected to their wives attending the appointments—especially with male doctors–-the health organizations hired more female doctors and made male family members welcome.
 
 

The Design of RPS

RPS was designed with the preliminary period (known as RPS-I) to run from 2000 to 2002, and then, if evaluations warranted it, the second, expanded program (RPS-II) to follow. The initial planning process included careful selection and preparation of the beneficiaries, service providers and monitoring and evaluation systems. Based on favorable results, RPS-II was authorized with some modifications to the program (see below). 
 
RPS’s focus on the rural poor accurately mirrored poverty patterns in Nicaragua, where 48 percent the people were poor in 1998, three quarters of them living in the countryside.[xxvi] The departments of Madriz and Matagalpa, in the nation’s Central Region, were chosen for the first phase because of their high levels of poverty –80 percent of inhabitants poor and half extremely poor—as well as their reasonable numbers of schools and health facilities and good organizational capabilities.[xxvii]
 
Within these departments, planners next selected 6 municipalities that appeared administratively capable of running the program.   The local rates of rural poverty and extreme poverty far exceeded national averages, with 36 to 61 percent of residents extremely poor, compared to 21 percent for the nation at large, and 78 to 90 percent either poor or extremely poor, compared to 45 percent nationally. Targeting was then further refined to identify specific areas with such indicators of poverty as large families, high percentages of households lacking piped water or a latrine, and high rates of illiteracy.[xxviii] All households within the chosen areas that had members of the right ages were eligible to receive payments unless they were considered too prosperous because they owned either a vehicle or at least 14.1 hectares (about 35 acres) of land-- criteria that disqualified 2.5 percent of families.[xxix] RPS-I ultimately enrolled some 10,000 households.[xxx]
 
Once underway, RPS regularly gave each female household head three types of fixed payments, each with its own conditions. (See Box 1, Elements of Nicaragua’s Red de Proteccion Social #1). To avoid incentives for having more children, amounts were calculated per household rather than per child. The Food Security Payment required that children had up-to-date vaccinations, met a required schedule of health appointments, and maintained an appropriate weight and that household heads attended regular informative sessions on health and nutrition.   The Educational Payment required that all of a household’s young children attend school regularly and passed each year at least through fourth grade. The annual School Supplies payment required that each child be registered at the school year’s start. A failure by any family member to meet requirements deprived the family of the payment.   
 

The results: Success

Agreeing to take payments made beneficiaries responsible for fulfilling a number of requirements, so informing potential participants about them and gaining their consent were important preparatory steps. In the months before payments began, assemblies in target communities explained the advantages of participation, the obligations it entailed, and the procedures that would verify compliance. Women indicated their agreement with their signature or, if illiterate, with their thumbprint. At the assemblies, the women divided themselves into groups of about 20, usually along neighborhood or social lines. Each group then elected one of its number its promotora (promoter), who would monitor and encourage fulfillment of members’ obligations and serve as a liaison with program officials.
 
Formal evaluations found the “impacts of RPS-1…overwhelmingly positive,” Moore notes. Recipients’ household income rose an average of 18%. Food consumption increased and diets became more diverse and nourishing, with significantly more meat, fruits and vegetables. “Possibly the most admirable,” according to Moore, were the effects on health, which, like all other results, were strongest among the poorest families. Stunting, which had afflicted 40 percent of the children at the project start, fell in two years by more than 5 percentage points, an “unparalleled” and “expectedly high” improvement. [xxxi] “Very few programs in the world have shown such a decrease in stunting in such a short time,” add Maluccio and Flores.[xxxii] Vaccination rates rose during the term of RPS-1 in both participating children and those not in the program, but more rapidly among the participants. The rate of anemia, however, did not drop from the 30% rate at RPS’s beginning; for a number of reasons, many mothers appeared not to have given their children the iron supplements provided. 
 
School attendance rose by 13 percentage points in participating children up to fourth grade. RPS income did not, as some planners had feared, affect adult household members’ propensity to work, but it did reduce, by 6 percentage points, labor-force participation by beneficiary children.[xxxiii]
 
In short, “RPS-I met or exceeded most expectations of its potential impact” and also “effectively targeted benefits” to poor families; 81 percent of beneficiary households had incomes in the nation’s bottom 40 percent, according to Moore.[xxxiv]
 
Based on this initial success, RPS-II was launched in 2003 and brought in an additional 15,000 households into the program[xxxv]. General goals remained unchanged. Planners thought, however, that given RPS-I’s tremendous impact on its participants, lower demand-side payments could maintain the positive results—a surmise confirmed by experience.   Payment amounts were therefore reduced. (See Box 2. Elements of Nicaragua’s Red de Proteccion Social #2).   Health programs increased their services to include reproductive health and maternal care for women. Payments to teachers were also increased, and a new vocational education benefit added. Households that stopped receiving demand-side transfers after their three-year period of eligibility expired continued to receive money for the supply-side transfers.
 

RPS II – Design Changes and Results

Evaluations of RPS-II produced results similar to its predecessor—significantly increased spending on food, and especially on fruits and vegetables, and increases in the number of children who had medical check-ups and of women who received prenatal care and used contraception?. Evaluators could, not, however, “[disentangle] the individual impacts of demand-side and supply side incentives,” note Regalia and Castro, although results “clearly [show] that combining the two can significantly increase the use of health services among poor households and improve health outcomes.”[xxxvi]
 
And even though RPS did not in fact resemble the standard social safety net program that its name suggests, writes Maluccio, it ultimately “performed like one, protecting those in greatest need” during the so-called “coffee crisis” of 2000 to 2002, when world prices for Central America’s major cash crop plummeted, along with the income of poor coffee growers. In areas of Nicaragua not participating in RPS, household spending dropped by 11 percent overall and by 27 percent in areas dependent on growing coffee.   Households enrolled in RPS, on the other hand, spent significantly more than non-participants, with expenditures rising 6% in areas that were not dependent on coffee and falling only 3% in those that were. RPS therefore served as a “cushion” protecting households from economic loss during the crisis and, by removing the need for families to send children to work in order to maintain their incomes, “safeguarded investment in children.”[xxxv
 

Success no guarantee of continuation

Despite RPS’s very favorable results, however, the Nicaraguan government did not provide funds to continue it into a third phase. Although “perceived as so successful among international circles,” RPS did not “command the necessary support” in domestic political circles to obtain continued funding, according to Moore.[xxxviii] She suggests a number of reasons, significant among them a “failure to educate domestic stakeholders on [RPS’s] components and positive impacts” and overcome widespread “skepticism” about the program. RPS staff “believed that, rather than wasting their time arguing with government officials, it would be more profitable to prove that the programme [sic] could work…[Clearly] the efforts they made to educate the public and politicians of RPS’s purpose, components and successes were inadequate” to mitigate “strong” resistance in various quarters. “Nicaragua’s unique history,” Moore continues, made some citizens “suspicious of programmes supported by certain capitalist countries” or that appeared “asistensialista”—likely to make recipients dependent. Some critics also faulted costs that they considered excessive, including “the expenses involved in [the] rigorous impact evaluations,” she notes.
 
 “Another major, perhaps most obvious, factor in its eventual failure,” Moore adds, was the program’s move from the jurisdiction of one government agency, the Emergency Social Investment Fund, to another, the Ministry of Family, where it had less institutional support. This “caused RPS to lose its autonomy, efficiency and credibility….Perhaps if a concerted domestic marketing campaign had continually educated the general public and politicians on the purpose, components and achievements of RPS, there would have been more support…within the ministry.”
 
 Even with its “disappointing conclusion,” however, RPS was “an excellent example of a well-designed CCT that achieved significant results in a few years,” Moore concludes. This it also serves to remind “policymakers… of the balance they must keep in performing well for international stakeholders while securing domestic acceptance of their own programmes.”
 
 
           
 

BOX 1[xxxix]

Elements of Nicaragua’s “Social Safety Net” (Red de Proteccion Social) Phase #1

 
Payments to Families (Demand-Side elements)
 
Food Payment (Bono de Alimentacion)
  • $224 (US) paid each year to each targeted family, in bi-monthly installments’
  • Parents required to attend bi-monthly educational meetings
  • Children must have health appointments on required schedule, monthly for those under 2, bimonthly for those 2-5
  • All children must maintain appropriate weight          
 
School Payments (Bono Escolar)
  • $112 US per year, in bi-monthly payments, to all beneficiary families with a 7- to 13-year old child who has not finished fourth grade
  • All children between 7 and 13 who have not finished fourth grade must go to school with fewer than 3 unexcused absences each month
 
School Supplies Package (Mochila Escolar)
  • $21 US per year to buy school supplies and clothing for each first- to fourth-grade child in a beneficiary family
  • Children must be enrolled at school when the school year starts
 
Payments to Service Providers (Supply-side elements)
 
Supply-Side Education Payment (Bono a la Oferta—Educacion)
  • $4.75 US per first- to fourth-grade child in beneficiary families
  • Families receive the payment, but must give it to the teacher or school
  •  All eligible children in the family must have adequate school attendance records
 
Supply-Side Health Payment (Bono a la Oferta—Salud)
  • Approximately $54 US per beneficiary family per year paid to private organizations providing health care under government contracts
  • Payment dependent on meeting specified service goals
 
 

BOX 2[xl]

 

Elements of Nicaragua’s “Social Safety Net” (Red de Proteccion Social) Phase #2

 
New Program Element
 
Vocational Training (Formacion Ocupacional)
  • Individuals aged 14 to 25 who are elementary school graduates and/or are literate and have completed all their planned schooling may apply
  • Participants attend approximately three months of free courses, depending on the vocation studied and receive monthly payments of $15 US to make up for lost earning earnings as well as completion payment of $200 US.
  • To receive opportunity payments, participants must attend classes
  • To receive completion payments, participants must create an acceptable business plan
  • Participants must spend completion payment on the costs of starting a business in the chosen occupation
     
Continuing Program Elements
Payments to Families (Demand-side elements)
Food Security Payment (Bono de Seguridad Alimentaria)
  • Payments to each targeted family of $168 US in the first year, $145 US in the second year and $126 US in the final year
  • Children up to age 9 must have up-to-date immunizations
  • Children, adolescents and reproductive-aged women must go to medical appointments on required schedule
  •  Women and adolescents must attend required training programs
     
Educational Payment (Bono Escolar)
  • Targeted families that have one or more children between 7 and 13 who have not finished fourth grade receive $90 US per year
  • All children between 7 and 13 who have not yet finished fourth grade must attend school and maintain an attendance record of at least an 85%
  •  Family must turn over the supply-side payments to teachers as required
     
School Supplies Package (Mochila Escolar)
  • $25 US each year to each first- through fourth grader in targeted families to buy school supplies and clothing
  • Children must be enrolled in school at start of the academic year
     
Payments to Service Providers (Supply-side elements)
Supply-side Education Payment (Bono a al Oferta-Educacion)
  • $8 US per year per child in beneficiary families attending first through fourth grade
  • Families receive payment, but must give it to the teacher or school
  •  All eligible children in beneficiary family must be in school and teacher must take part in the community’s parent association
     
Supply-side Health Payment (Bono a la Oferta-Salud)
  • Up to $90 per year for each beneficiary family paid to private organizations providing health services under government contracts
  • Payment depends on meeting specified health coverage goals.
 

[i] Maluccio, John A. Coping with the “Coffee Crisis” in Central America: The Role of the Nicaraguan Red de Proteccion Social (RPS). Discussion Paper 188. Food Consumption and Nutrition Division of the International Food Policy Research Institute. 2005
[ii] Moore, Charity. Nicaragua’s Red de Protecion Social: An Exemplary but Short-Lived Conditional Cash Transfer Programme. Country Study 17. International Policy Centre for Inclusive Growth. January, 2009
[iii] Inter-Regional Inequality Facility, Overseas Development Institute. Red de Proteccion Social—Nicaragua. Policy Brief 3., London. February, 2006.
[iv] Glassman, Amanda; Todd, Jessica and Gaardner, Marie. Latin America: Cash Transfers to Support Better Household Decisions. In Performance Incentives for Global Health: Potentials and Pitfalls. Rena Eichler, Ruth Levine and the Performance-Based Incentives Working Group. Washington, D.C.: Center for Global Development. 2009
[v] Maluccio, John A., and Flores, Rafael. Impact Evaluation of a Conditional Cash Transfer Program: The Nicaraguan Red de Proteccion Social. Research Report 141. Washington, D.C.: International Food Policy Research Institute. 2005
[vi] Regalia, Fernando and Castro, Leslie. Nicaragua: Combining Demand- and Supply-Side Incentives. In Performance Incentives for Global Health: Potentials and Pitfalls. Rena Eichler, Ruth Levine and the Performance-Based Incentives Working Group. Washington, D.C.: Center for Global Development. 2009.
[vii] Maluccio, John A. Coping with the “Coffee Crisis” in Central America: The Role of the Nicaraguan Red de Proteccion Social (RPS). Discussion Paper 188. Food Consumption and Nutrition Division of the International Food Policy Research Institute. 2005
[viii] Maluccio.
[ix] Moore.
[x] CIA World Factbook 1998
[xi] “Mitch: The Deadliest Atlantic Hurricane Since 1780.” NOAA Satellite and National Climatic Data Center. http://lwf.ncdc.noaa.gov/oa/reports/mitch/mitch.html
[xii] Central America After Hurricane Mitch:
The Challenge of Turning a Disaster into an Opportunity. Consultative Group for the Reconstruction and Transformation of Central America. Inter-American Development Bank. http://www.iadb.org/regions/re2/consultative_group/backgrounder3.htm
[xiii]Maluccio and Flores
[xiv] The World Health Report 1999—Making a Difference. World Health Organization.
[xv] Regalia and Castro
[xvi] Moore.
[xvii] World Health Report 1999
[xviii] Moore
[xix] Red de Proteccion Social—Nicaragua. Policy Brief 3. Inter-Regional Inequality Facility, Overseas Development Institute. February 2006
[xx] Moore.
[xxi] Moore.
[xxii] Moore.
[xxiii] Moore.
[xxiv] Regalio and Castro
[xxv] Moore
[xxvi] Maluccio and Flores
[xxvii] Maluccio and Flores
[xxviii] Maluccio and Flores
[xxix] Moore.
[xxx] Maluccio, John A.; Adato, Michelle; Flores, Rafael, and Roopnaraine, Terry. Red de Proteccion Social—Mi Familia: Breaking the Cycle of Poverty. International Food Research Policy Insitute. 2005
[xxxi] Moore
[xxxii] Maluccio and Flores.
[xxxiii] Moore
[xxxiv] Moore
[xxxv] RPS: Red de Proteccion Social (The Social Safety Net Program) Nicaragua. International Food Policy Research Institute. http://www.ifpri.org/themes/MP18/nicaraguarps.htm
[xxxvi] Regalia and Castro
[xxxvii] Maluccio, Coffee Crisis
[xxxviii] Moore
[xxxix] Moore
[xl] Moore

 

Resource Information

Countries: Nicaragua
Date of Publication: October 2009

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