Conditional cash transfer (CCT) programs are a powerful public policy weapon against poverty. They transfer money to families in exchange for their compliance with certain conditions, which normally revolve around children's education and health, such as school attendance or regular vaccinations. In Latin America, the region where these programs are most popular, it is estimated that they have benefited more than 15 million poor families and over 60 million low-income people.
As a result of their activities, most of the information that these types of platforms generate is associated with descriptive poverty statistics. They also have an extremely wide reach, particularly in countries like Brazil, Mexico, and Colombia, where CCT programs are especially well developed. Their capillarity is also quite high, since by definition they try to be within reach of all those low-income people who may be eligible to receive aid. On the other hand, the control over the platform that incoming firms may have is often low or very low, due to the public sector's dominance, so the margin for experimenting with different products may be restricted by the stance of existing stakeholders.
The best fitting industries are, in this case, providers of financial services, which might help recipients to better manage their subsidies or smooth out their cash flows with microinsurance, small consumer loans and saving accounts. In order to lower the transaction costs for program beneficiaries, mobile phone offerings are also likely to provide excellent synergies. Furthermore, products or services related with education, health or nutrition could also be well accommodated in these platforms.
A version of this post, co-authored with Manuel Bueno, was published on the NextBillion blog.
Read part 1 of Francisco Mejía's platform series for the MajorityMarkets blog.
