A transformation is under way among Brazil's underclass

Programs that address the needs of the poor are a cornerstone of Brazil President Luiz Inácio Lula da Silva's social agenda. Even during these days of global financial turmoil and uncertainty the economic condition of Brazil's underclass continues to improve. A key appears to be Brazil's emphasis on investing in the poor as opposed to simply offering welfare assistance. This approach not only makes good economic sense, it is empowering as well. (GW)

Brazil becomes antipoverty showcase

By Sara Miller Llana

Christian Science Monitor

November 13, 2008

Cumaru, Brazil - In the arid, impoverished expanse of northeast Brazil, Cumaru is the town no one's ever heard of. And once you get here, Maria Joelma da Silva's house is a 20-minute ride beyond where the paved road ends.

Ms. da Silva gets few guests.

Yet in August, officials from Angola, Ghana, the African Union, and the African Development Bank – here to study Brazil's social programs – stood in da Silva's yard gleaning lessons from the small but productive garden that is flourishing where cacti once dominated.

"Everyone talks about how we can't do anything right in the northeast, but if these people came here from so far away, we have to be doing something important in the countryside," says da Silva, who has used government subsidies and help from a nonprofit to build a cistern and start a small business selling honey and other crops. Today, she is part of a transformation under way among Brazil's underclass.

Although the global financial crisis is taking its toll on Brazil, the country's economy has boomed in the past five years, and the poor have risen with the swell. Lower inflation and easier access to credit – along with a higher minimum wage – have created a new class of consumers who have kept the economy growing. And with the world's largest conditional welfare program for the poor, and a slew of complementary local, state, and federal initiatives that continue to target the poor – a cornerstone of the presidency of President Luiz Inácio Lula da Silva – many Brazilians are feeling economic stability as they have never before.

"The question of poverty is at the forefront of Latin American governments today. The poor are visible again, and Brazil is playing a leading role in this," says Patrus Ananias, Brazil's minister of social development, who traveled to Namibia last month to help the African Union review its social policy framework.

The arid plains of Brazil's impoverished northeast, where Lula was born, seem a world away from the booming southeast.

Towns are isolated from one another, connected by roads that, when paved, are riddled with potholes. And yet, the poverty in this region has been reduced more than anywhere else in the country.

Half the nation's welfare subsidies go to small rural towns, like Manari, where mass migration to the cities was once the only hope. Manari, in the state of Pernambuco, sits at the edge of the "sertao" or "backlands," a land of dusty fields and craggy trees. Five years ago, it received the lowest human development index ranking in the country by the United Nations Development Program, with an average monthly income of $13 and 57 percent of the population illiterate – on par with Haiti, the poorest country in the Western Hemisphere.

Today Manari is undergoing a boom. The town received potable water for the first time last year.

In the past three years, the first high school and health clinic were built. This summer, the government inaugurated the final 15-mile stretch of asphalt connecting Manari to the main highway.

But the most immediate improvement to the quality of life has been the government's monthly conditional cash payments to two-thirds of the town, or 3,000 families.

Mothers receive up to 182 reais – about $82 – as long as they keep their children in school, get them vaccinated, and participate in regular health checkups.

"We have security now," says Dida Santos, who lives in a simple, one-room home with a few chickens in the backyard. She used to survive on the beans and corn she and her husband grow and the few animals they raise – going to the market only when there was spare money. Now, she makes weekly trips, and has saved up enough to buy a refrigerator. It's something she never needed before – she had no spare food to put in it.

While Bolsa Familia has played an important role in reducing poverty, the government has also worked to create more formal jobs – 8.1 million more since Lula took office – and raised the minimum wage to 415 reais ($187) a month from 200 reais ($90) a month.

The number of those in poverty dropped to 18 percent in 2007 from 19 percent the year before. According to government figures, the incomes of the poorest increased 22 percent in the past five years, while the rich increased 4.9 percent. And the Getulio Vargas Foundation in August reported that 52 percent of Brazilians – a majority – are now part of the middle class. "There are very few countries that reduce inequality and poverty at the same time," says Rosani Cunha, the Bolsa Familia director in Brasilia.

The world's first conditional cash transfer programs were introduced in Brazil in 1995 at the municipal level, and were implemented at a national level in Mexico the following year.

The concept has since taken a foothold in Latin America, where more than a dozen such programs have been launched. Another dozen are being implemented around the rest of the world. But today Brazil's program has grown into the largest, and among the most successful, in the world. It serves 11 million families (close to 50 million people), or a quarter of the population. It draws attention because of its size and because it is decentralized. While beneficiaries get paid via debit card from the federal government, it is the state and municipal governments that administer the program.

"Many countries are looking to Brazil as an example of how to implement these programs. They are looking at how Brazil has done this at such a massive scale. Study tours are going to Brazil all the time to learn from this experience," says Kathy Lindert, a human development economist at the World Bank who worked in Brasilia while Bolsa Familia expanded. "The impacts are impressive. We are seeing one of largest, most unequal countries get more equal."

Brazil's example

Ms. Cunha's team has traveled all over the world, from Egypt to India. Last year, Brazil implemented its first pilot program in Ghana, helping the West African country develop a program that serves 12,000 families, with aims to reach 38,000 by the end of the year.

The model is not without its critics, however.

Some have blamed it for disincentivizing employment – which even supporters of the program attest to. For example, Geraldina Rodrigues Pereira, whose tiny shop sells the bread, pasta, and rice that residents buy in Manari, says that her store is bustling now that residents have a steady monthly income. But now she can't find anyone willing to harvest her small patch of land next to her house. "Nobody wants to do the work anymore," she says.

The government says that the program has little effect on labor trends, and sees its emphasis on social welfare as an economic strategy. While more of the budget has been dedicated to spending on social programs, increasing from $3.4 billion in 2002 to an estimated $13.4 billion this year, the government says it's not just about welfare. "Social programs are helping the economy grow. It's not only grow to include, but include to grow," says Mr. Ananias. "It's not just an ethical matter, but a pragmatic one."

Next step: Job training

Ananias says that Bolsa Familia is meant to lift people from extreme poverty, not to subsidize them forever, and now that a quarter of the population is receiving it, the ministry is putting more emphasis on job training for recipients.

That is done in part through a host of state and local programs developed to help residents find more economic stability.

Many of these complementary programs can be implemented elsewhere.

The African delegation that visited da Silva's farm in August, for instance, learned about a government and NGO effort by Asa Brasil to bring cisterns to the rural poor.

For da Silva, who also receives Bolsa Familia payments, the program has not only provided economic stability but an opportunity to stay on her land in a place where mass migration to cities is the norm.

"We wanted to show the African people that it is possible to stay here and live a dignified life," says da Silva, who, a few years back, during a particularly harsh drought, had to sell her only cow for food for her three children. Now she has three cows, grows lemons and oranges, and has purchased two hectares of land to expand down the hillside from her home – five times what she previously owned.

Greater access to microcredit is also helping many Brazilians migrate to the middle class, particularly in the northeast.

The government's Bank of the Northeast has 352,000 clients with microloans today, up from 144,000 in 2003. They are aiming for 400,000 clients by the end of this year and 1 million by 2011, says Paulo Eduardo Andrade, manager of business in the microfinance unit at the bank's sprawling headquarters in Fortaleza. "This has given stability to small business owners that they did not have before," he says.

The optimism is not endless. As the financial crisis looms, commodity prices are dropping, and some worry that could have an effect on poverty programs. And Brazil is still dogged by institutional problems, such as poor education and corruption. Poverty cannot be reduced, critics say, if education itself is not improved. Brazil has one of the highest youth illiteracy rates in the region and its students rank close to last in math and reading proficiency, according to a 2006 survey by the Organization for Economic Cooperation and Development.

Another criticism is that Bolsa Familia is a form of political populism intended to keep Lula in power. Even though the program began under his predecessor, it has expanded greatly under his leadership – from 3 million families to 11 million. But Cunha says she believes the program has served to give poor voters independence from politicians who cannot compete in handouts with Bolsa Familia. "It takes away the manipulation," she says.

In fact, many point to the presidential elections in 2006 and more recent local elections earlier last month as a sign of how broad-based support has become – and how it can be applied to nations no matter what its politics are. Few, regardless of party affiliation, criticized Bolsa Familia. Instead, one theme of this year's races was a promise to ensure that such programs thrive.

That is because Bolsa Familia has broad political appeal, says Ms. Lindert.

For those on the right, the concept of welfare is more palatable if it's distributed under "contractual" conditions such as education with the long-term goal to help the poor help themselves out of poverty.

The left is drawn to the idea that it empowers citizens to take up their universal rights to education and health. "It's appealing to both the right and the left," she says.