Cablegate: Colombia Reduces Poverty Through Growth Combined


DE RUEHBO #0190/01 0151941
P 151941Z JAN 08




E.O. 12958: N/A

REF: 07 BOGOTA 900

1. SUMMARY. Economic growth and anti-poverty programs have
lifted over 5.5 million Colombians out of poverty since 1999.
"Families in Action," the GOC's conditional cash transfer
program, substantially increased school attendance and
children's health for 700,000 families in extreme poverty.
The GOC recently expanded the program to cover an additional
one million impoverished families, and began a new
anti-poverty program called "Juntos" ("Together") in late
2007. The World Bank, Inter-American Development Bank (IDB)
and the GOC have collectively committed USD 1.78 billion to
Families in Action through 2011 and are open to providing
assistance to Juntos. END SUMMARY

Economic Growth Helps Reduce Poverty

2. Economic growth averaging five percent annually since
2002 has helped lift over 5.5 million Colombians out of
poverty. The number of impoverished Colombians in poverty
dropped from 57.5 percent to 45 percent between 1999 and
2006, while extreme poverty rates fell from 25.4 percent to
12 percent over the same period. Natalia Millan, an analyst
at the economic think-tank Fedesarrollo who studies poverty,
estimated that in 2007 poverty dropped at least two to three
percent. Although official data on 2007 poverty rates will
not be released until mid-2008, Andres Escobar Arango, head
of the National Planning Department's Poverty Office,
privately agreed with Millan's estimate.

3. Mauricio Cardenas, Director of Fedesarrollo and a former
Minister of Economic Development, cites economic growth as
responsible for half of Colombia's poverty reduction with the
rest coming from targeted anti-poverty programs. Cardenas
estimates the U.S.-Colombia Trade Promotion Agreement (CTPA)
will increase Colombian GDP growth by up to two percent per
year, thereby lowering the poverty rate by nearly one percent
annually and lifting 500,000 Colombians out of poverty each

"Families in Action" Helps 700,000 Families

4. The GOC started the Families in Action program in 2001 as
a temporary measure to reduce the social impact of the 1999
recession. The program follows a standard conditional cash
transfer model to reduce poverty and build human capital.
Impoverished families receive subsidies of USD 22 per month
for taking their children for health check-ups and an
additional USD 7-13 per month for each child in primary and
secondary school. More than 700,000 families, including over
a 100,000 displaced families, participated in 2006. World
Bank evaluations show the program has led to substantial
increases in school attendance and children's health. Miguel
Lopez, World Bank representative in Colombia, described the
program as "very successful" in improving school attendance
and health. Many displaced and vulnerable families in the
program also participate in USAID income-generation programs
that help them transition out of poverty.

1.5 Million Fewer Families in Poverty

5. The GOC hopes to pull 1.5 million families out of extreme
poverty by 2010 through participation in Families in Action
and a new program called "Juntos." Diego Molano of Accion
Social (the President's social program office), which
oversees Families in Action and Juntos, said Juntos will more
proactively attack the root causes of poverty.

6. Juntos families will have social workers assigned to help
ensure access to programs in nine essential areas:
identification/documentation (a significant problem in rural
areas, especially amongst displaced persons), work,
education, housing, nutrition, family dynamics,
insurance/banking, justice, and health. Under health, the
basic necessities include affiliation with the GOC's health
insurance program, prenatal care, children's vaccinations and
adult family planning. Co-managers will help families get
access to these necessities. Molano said the program will
also help Accion Social locate weak spots in the GOC's social
support network. Molano stressed that, while Juntos will
provide the tools to climb out of poverty, Colombia's
continued economic growth and job creation remain key to
families becoming economically self-sufficient.

Pilot Program Successfully Initiated

7. In 2007 Accion Social successfully enrolled an additional
one million families into Families in Action and started a
pilot Juntos program for 35,000 families (expanding to 70,000
families) in 30 municipalities with 700 new social workers.
Molano said the pilot program demonstrated that "outsourcing"
works well in hiring and managing the 15,000 social workers
Juntos needs (one social worker, whose salary will be split
between the national government and local municipalities, for
every 100 families). Accion Social will create consortiums
of universities, foundations, NGOs and local chambers of
commerce to hire and manage the social workers in each of 110
microregions. Phase Three of the Juntos program starts in
February 2008 when Accion Social plans to expand the program
into all of Colombia's 1,098 municipalities. Accion Social
plans to have 750,000 families fully participating in Juntos
by end of 2008, and 1.5 million families by the end of 2009.

GOC, World Bank and IDB Commit USD 1.78 Billion
--------------------------------------------- --

8. The GOC estimates that Families in Action will cost USD
1.78 billion through 2011. The GOC committed to USD 440
million and requested loans from the World Bank and IDB of
USD 668 million each. The World Bank approved a USD 105
million loan in March 2007 and expects to approve a new loan
of USD 563 million at the end of 2008. The IDB approved its
first loan of USD 306 million in December 2007 and expects to
approve a new loan for USD 362 million in mid-2009. Lopez
said that the GOC has not approached either institution about
loans for the Juntos program, but both were working with
Accion Social to help develop Juntos and would review
possible assistance as the program progressed.


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