Take the "Cash" out of Conditional Cash Transfers

It takes a lot to get people to change. Then God said, “Let there be Conditional Cash Transfers”; and He saw that it was good.

Often touted as the magic bullet in the development community, conditional cash transfers, or CCTs as they shall be hence known, hold immense promise. They have increased the rates of institutional deliveries, put thousands of children into school, and helped many more crawl out of poverty. The introduction of CCTs has brought a paradigm change in the arena of behavior modification.

For the uninitiated (Hi, Ma!), a CCT, as the World Bank defines it, is a program that transfers cash, generally to poor households, on the condition that those households make pre-specified investments in the human capital of their children. CCTs have now exploded across the world and although the jury on whether they are an acceptable intervention in any situation where a behavioral modification is required, they have proved their effectiveness and efficiency in a number of settings and cultures. Money, it turns out, does make the world go round.

My question is, can’t we use something else to turn the world round? I’m sure cash in hand is a powerful incentive in modifying behavior, but the cash itself has suspect usefulness from a development perspective. For example, what’s to stop a man from using the money he received for sending his kid to school, to buy himself a week’s supply of liquor? There are conditions on the receipt of the money, not on the use of that money. Wouldn’t it be better to construct a system where the incentive for healthy behavior is itself health-promoting? The two-birds-with-one-stone deal. Vestergaard-Frandsen has an answer.

Vestergaard-Frandsen is an interesting company that runs what they call a “Humanitarian Entrepreneurship” business model. It is essentially a social enterprise that follows a “profit with a purpose” approach. They develop products that cater to the health needs of the developing world, price them competitively and make their profit from the whole exercise. They have a whole array of products ranging from portable water filters to mosquito nets. Recently, they embarked upon an experiment that put their money where their mouths were.

Instead of describing the details of their experiment for you, I’d rather direct you to this excellent description by their communications and public relations director, Peter Cleary. If you have a little more time, I highly recommend watching this video documenting their work. For the truly lazy, and strapped for time, here’s an executive summary. The good people from VF went out to a district in Kenya, and gave out - for free - a combined package consisting of a bed net, a water filter and condoms. The only catch- they had to receive counseling for an HIV-test. Before you scream “Unethical!”, you should know that the actual test was voluntary; all that people had to do to “earn” the package was undergo counseling about the test. In the span of one week, they succeeded in testing 50,000 people, a massive upsurge in voluntary HIV-surveillance, in a community that was traditionally loathe to get itself tested for HIV. The incentive inducing people to get the HIV-test wasn’t any cash; it was the CarePack, VF’s name for their goody-bag. It worked perfectly.

The philosophy behind this experiment takes the interpretation of integration to a whole new level. Not only does it integrate effective interventions for the three most devastating diseases in the region, HIV, malaria and diarrheal diseases, but it also integrates the private sector, government machinery and most importantly, the community. They brought on Yvonne Chaka Chaka, a South African singer, who is also a local superstar, and incorporated her into their advocacy strategy, which drew people out of their homes and into the testing clinics. This was the kind of community involvement that money cannot buy.

This brings me back to my original argument, that CCTs may be innovative and imaginative, but they don’t go the whole way. There may just be a much more cost-effective and in truth, useful, way to incentivize people. The folks at Vestergaard-Frandsen certainly have a story to prove so.