Exchanging notes on one of the biggest ‘digital’ conditional cash transfer programs

It takes strong commitment on the part of a government to drive financial inclusion. For a country like Brazil, with bustling cities like Rio de Janeiro to incredibly remote areas in the Amazon, things gets more complicated. What I find admirable about the Brazilian Government’s efforts in improving access to financial services is its success in reaching out to the most remote and rural parts of the country and not letting geography come in the way of social welfare payments.

In 2003, the Government of Brazil created “Bolsa Familia”, one of the world’s first “Conditional Cash Transfer” (CCT) programs. Fourteen years later, thanks to a digitization effort, setting up of supporting infrastructure, and strong leadership from both federal and state governments, “Bolsa Familia” benefits over 14 million households in the country. It is now one of the biggest CCTs in the world. This shift away from cash has led to significant savings for the government, reducing its transaction costs from 14.7 percent of total payments to 2.6 percent.

To gain valuable insights from Brazil’s experience in digitizing the Bolsa Família welfare payments, representatives from six member countries of the Better Than Cash Alliance - Bangladesh, Colombia, Ethiopia, Jordan, Ghana and Philippines – travelled to Brasilia and Rio de Janeiro. Participants came from various government institutions, such as ministries of finance, ministries of social welfare and central banks.

Here are some of the testimonials from the Brazil Peer-Exchange participants:

Md Zillar Rahman, Secretary, Ministry of Social Welfare, Bangladesh
“I was invited to experience the recurring payment system in Brazil. They have introduced a great system that allows payments to be made directly to the poor people electronically without any hazard. The same system can be replicated in our country and I feel I have really benefitted from this experience.”

Lilia Catris Guillermo, Undersecretary of Department of Budget and Management, Philippines
“I am very happy that I was invited on this Peer-Exchange. We are learning a lot on what is happening in this space of digital payments, especially in Brazil in administering the CCT program by the government. I am sure I’ll be taking home a lot of learnings and we can leapfrog in this process because of my learnings here.”

Melaku Kifle Woldemariam, Advisor Ministry of Finance & Economic Cooperation, Ethiopia
“There a lot of things that I have learnt but the most important is single-registry and direct payments from the Federal Government to the beneficiaries without touching any level of the government in the middle.”

This “peer exchange” was the second of its kind, taking place as part of the Alliance’s growing work with its member countries to support their journey towards digitization. The first such exchange was held last year, for which representatives from Benin, Ghana, Peru, Senegal, Uruguay and Vietnam travelled to Colombia to learn about the digitization of the CCT Más Familias en Acción.

The Better Than Cash Alliance’s knowledge exchanges provide members with “deep dive” learning on current digital payment trends and good practices, and the opportunity to share, discuss, learn, and apply experiences related to an inclusive digital payment ecosystem. These exchanges have been successful as they are designed with clear learning objectives and an “ecosystem” approach. The latter entails participants having one-to-one sessions with all the relevant stakeholders involved in digitizing payments in the host country namely: Ministry of Finance, Ministry of Social Development or Social Welfare, Central Bank, private and public sector payments providers, and beneficiaries from these programs. The Alliance also supports member countries during and after the exchange to facilitate successful implementation of lessons learned.

Other peer exchanges are expected to take place later this year in India, focusing on Bridging the Digital Divide through the JAM (Jan Dhan, Aadhaar and Mobile) Trinity, and in Rwanda on Digital Government. India has the shift to digital payments at the center of its national development and inclusive growth efforts, while Rwanda is promoting the use of ICT in all sectors of the economy to ensure sustainable development and a vibrant digital financial sector. We are positive that more of our government members will be able to gain valuable insights from the two countries.