The inauguration speech given by President Luiz Inácio Lula da Silva, on January 1, 2023, reinforced historic commitments assumed since his first term (2002): the fight against hunger, the elimination of poverty and the reduction of social inequalities. “Our first actions aim to rescue 33 million people from hunger and rescue more than 100 million Brazilians from poverty”. Still according to the president, “this commitment begins with the guarantee of a renewed, stronger and fairer Bolsa Família Program, to serve those who need it most”.
The direct support measures proposed by the President can help achieve the desired results more quickly. The challenge is to overcome the problems already identified by the transition team in conducting the income transfer program and take advantage of the innovations brought by new technologies, without compromising economic growth, which is key to a sustainable social protection system.
The renewal of the Bolsa Família requires the immediate confrontation of three major challenges. Firstly, the reconstruction of the Cadastro Único. The national database used to identify the most vulnerable families in the country needs to be recovered.
Bolsa Família, 34 federal programs, hundreds of municipal programs and the Unified Social Assistance System (Suas) in Brazil are operating without a reliable database. The pandemic period brutally affected the quality of the register. Today 25% of the information is out of date for more than two years. The introduction of applications disconnected from the reality of Suas brought fragile information to the base. Finally, the design of extraordinary benefits, created in 2022, generated perverse incentives, such as the separation of families in order to maximize the amounts received.
Now, the Ministry of Social Development needs to identify which are the possible families that may not be complying with the registration requirements and invite them to re-register. For this, it will be necessary to use new verification techniques with improvements in the processes of verification of registration information using the history of families in the Cadastro Único and other administrative records.
The municipalities, which provide assistance to families, interviews and registration, will need additional resources to carry out their activities and expand home visits. Existing funding mechanisms, such as the Decentralized Management Index, can be a good tool in this regard. Finally, media campaigns about the importance of accurate recording should be encouraged.
The second challenge is the review of the income transfer program. To make Bolsa Família stronger and fairer, it will be necessary to guarantee fiscal space, review the program’s parameters and design, and overcome operational problems. The increase in coverage and the average benefit paid to families increased the cost of the program. Historically, Bolsa Família operated in the range of 14 million families, with annual values close to 0.5% of GDP. Currently, the program reaches 21 million families with expenses close to 2.5% of GDP.
This recent expansion was carried out in a disorderly manner, the fixed payment per family, regardless of its composition, reduced the efficiency of social spending and generated incentives to register as a single family. The social assistance network was not strengthened to meet this additional demand. Today, imbalances between spending on benefits and shortcomings in the provision of assistance services are visible. In this way, the review of benefit structures, preferably with the definition of amounts to be paid per individual with differentiations for more vulnerable groups, must be accompanied by the strengthening of social assistance.
Third, the effectiveness of cash transfers improves when families meet conditionalities and when they are included in complementary programs. Both measures were weakened during the pandemic, for different reasons. Mobility restrictions, school closures and the health crisis resulted in the interruption of verification of education and health conditionalities. The resumption of this process has not been simple. Federal systems are fragile and the performance of local monitoring networks is insufficient. Rebuilding these systems and the program’s multisectoral support network is urgent.
However, it is important to remember that the effects of implementing these measures will only last for a long time if they are accompanied by policies to promote employment and productive inclusion, so that families can permanently escape poverty.
The challenges are the size of Brazil, but they cannot cause discouragement. This country led the process of implementing income transfer programs and was an example for the world. Therefore, you already know the way to combat hunger and overcome poverty in a short period of time.
This column was written in collaboration with my World Bank colleagues Josefina Posadas, senior economist, and Tiago Falcão, consultant.
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