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cash transfers

There is enough evidence on humanitarian cash transfers. Or perhaps not?

Ugo Gentilini's picture

Take these two numbers: 165 and 1. The former is the number of children in millions who are chronically malnourished or ‘stunted’; the latter is the number of robust impact evaluations comparing cash and in-kind transfers on malnutrition.
 
I emphasize ‘comparing’ since there is plenty of evidence on individual cash and in-kind (and voucher) programs, but very few studies deliberately assessing them under the same context, design parameters, and evaluation framework.

GiveDirectly just announced a basic income grant experiment. Here is how to make it better.

Berk Ozler's picture

In an article in Slate yesterday, co-founders of GiveDirectly announced that they will provide at least 6,000 people in Kenya with a basic income grant (BIG) for a period of 10-15 years, which will cost about $30 million. The proposal is scant in details at the moment, but this article in Vox suggests that dozens of villages will randomly be selected in an already selected region of Kenya for this exercise and everyone within will be given roughly a dollar a day per person for a decade.

Just give them the money: Why are cash transfers only 6% of humanitarian aid?

Duncan Green's picture

Paul Harvey, ODIGuest post from ODI’s Paul Harvey

Giving people cash in emergencies makes sense and more of it is starting to happen.  A recent high level panel report found that cash should radically disrupt the humanitarian system and that it’s use should grow dramatically from the current guesstimate of 6% of humanitarian spend.  And the Secretary General’s report for the World Humanitarian Summit calls for using ‘cash-based programming as the preferred and default method of support’.

European Commission’s Humanitarian aid and Civil Protection department (ECHO) finances basic services for 100,000 Eritrean refugees in EthiopiaBut 6% is much less than it should be. Given the strong case for cash transfers, what’s the hold-up in getting to 30%, 50% or even 70%? The hold-up isn’t the strength of the evidence, which is increasingly clear and compelling. Cash transfers are among the most rigorously evaluated and researched humanitarian tools of the last decade. In most contexts, humanitarian cash transfers can be provided to people safely, efficiently and accountably. People spend cash sensibly: they are not likely to spend it anti-socially (for example, on alcohol) and cash is no more prone to diversion than in-kind assistance. Local markets from Somalia to the Philippines have responded to cash injections without causing inflation (a concern often raised by cash transfer sceptics). Cash supports livelihoods by enabling investment and builds markets through increasing demand for goods and services. And with the growth of digital payments systems, cash can be delivered in increasingly affordable, secure and transparent ways.

People usually prefer receiving cash because it gives them greater choice and control over how best to meet their own needs, and a greater sense of dignity. And if people receive in-kind aid that doesn’t reflect their priorities they often have to sell it to buy what they really need as, for example, 70% of Syrian refugees in Iraq have done. The difference in what they can sell food or other goods for and what it costs to provide is a pure waste of limited resources. Unsurprisingly people are better than aid agencies at deciding what they most need.

Will cash replace staff?

Suvojit Chattopadhyay's picture

Consultation workshop in Jessore, BangladeshShould field staff in implementing organisations be made redundant? Do communities not need technical guidance and hand-holding? They also perhaps do not need support from external resource persons in solving collective action problems.

As a corollary to the push for ‘cash transfers’, the role of development workers has come under scrutiny. Last year, evidence from a couple of projects made this point quite strongly.

First, Chris Blattman, who based his argument on a review of the ultra-poor evaluations as well as his own research on ‘cash plus training’ intervention in Uganda:

The biggest expense across all the programs was staff time. Especially for supervision. Delivering training and cows takes skilled labor, and it’s hard to cut this back. But supervision? … should it cost 50 or 60 percent of the program? Is it more valuable than the cow or the grant itself? It’s hard to believe.

We tried to test this with cash-plus program in Uganda. Supervising the women cost about $377, about half the cost of the program and 2.5 times as much as the grant itself…

…and found that the supervision helped the women maintain the new businesses they started, but there was virtually no effect on consumption. We have no idea whether the supervision helps another year down the road. Maybe, eventually, it pays for itself. But the simple fact is this: taking away the most expensive part of the program had little effect on benefits after a whole year.

And Howard White made a similar point, reflecting on the evidence from Community Driven Development (CDD) projects:

In many CDD projects, the decision-making and application process is facilitated by outsiders. A chunk of project resources are used not for funding things communities want, but paying NGOs to train communities in how to hold meetings and help communities decide on what they want.

Now, facilitation may be useful. It can help ensure that the voices of the marginalised are heard, that poorer communities without the skills and connections get to apply and develop skills in project management. But I do wonder if communities that already have community-level decision-making bodies need outsiders to help them hold meetings and to decide their priority needs.

On one hand, Chris is saying supervision and monitoring isn’t worth the money, and on the other, Howard is saying the same might not even be good development strategy.

Cash as a response to humanitarian distress

Suvojit Chattopadhyay's picture

Men thrashing grain in IndiaIn the context of the subsidies regime in India, there is an ongoing debate on the suitability of cash transfers. With the much talked about JAM trinity – the Jan Dhan zero-balance bank accounts, Aadhar and mobile phones, it certainly appears that the state-sponsored welfare system is set to see a significant shift. While this shift may well fall short of being transformative, we could still expect an improvement in how benefits are delivered with reduced leakages to recipients. The use of the JAM model to extend the welfare net and to improve its efficiency implies a decisive move towards cash transfers, and therefore, one may be closer to settling the debate, at least in terms of favoured government policy.

But the argument in favour of cash is not new. I recently came across a 1986 United Nations University WIDER paper by Amartya Sen where he elegantly outlines five arguments in favour of direct distribution of cash in times of food crises. In this paper Food, Economics and Entitlements, Sen tackles this question in the context of a famine. First, Sen demonstrates how even in contexts where aggregate food output is plentiful, the ability of the poor to acquire this food is a whole different matter. Localised food shortages and famine-like situations can arise due to various reasons – at times when the prices of staples rise sharply, or when the prices of products the poor sell fall sharply. However, this isn’t obvious to policymakers as long as they view food sufficiency through the lens of per-capita food production alone.

When famines manifest themselves, there could be multiple policy response options. Sen talks of direct food distribution as the favoured method in those times. Three decades down the line, food relief continues to be popular in times of distress, even as direct cash transfers (as described above) are gaining ground as a favoured instrument of social welfare policy. Policy responses in these times is meant to enhance the ability of those affected, to ‘acquire’ more food. Both market-based solutions that begin with greater availability of cash, and direct distribution are potential paths to this end.
 

Weekly wire: The global forum

Roxanne Bauer's picture

World of NewsThese are some of the views and reports relevant to our readers that caught our attention this week.

Worth Every Cent
Foreign Affairs
In a Foreign Affairs article last year, we wrote what we hoped would be a provocative argument: “Cash grants to the poor are as good as or better than many traditional forms of aid when it comes to reducing poverty.” Cash grants are cheaper to administer and effective at giving recipients what they want, rather than what experts think they need. That argument seems less radical by the day. Experimental impact evaluations continue to show strong results for cash grants large or small. In August, David McKenzie of the World Bank reported results from a study of grants of $50,000 on average to entrepreneurs in Nigeria that showed large positive impacts on business creation, survival, profits, sales, and employment, including an increase of more than 20 percent in the likelihood of a firm having more than ten employees.

No, Deaton’s Nobel prize win isn’t a victory for aid sceptics
Bond
A lot of fuss has been made this week about the latest winner of the Nobel prize in economics, British-born economist Angus Deaton, and his apparent aversion to foreign aid. Predictably, much of the press has taken his victory as a vindication of their suspicions on aid. It’s worth getting a few things straight though. Deaton did not win the Nobel prize for his criticism of aid. He was awarded the prize for his analysis of inequality and creation of better tools with which to analyse living standards amongst the poorest people in the world. Deaton is, in fact, more of a critic than an opponent of aid. In the same way that a film critic doesn’t hate all films (although it sometimes seems they do), Deaton doesn’t hate all aid.

The things we do: Self-command takes practice

Roxanne Bauer's picture

Also available in: العربية

Following prolonged conflict, it is often difficult to reestablish security and reduce crime and violence, especially among poor young men. In Liberia, development experts have been researching the most effective ways to support high-risk individuals, and they may have found an effective approach combining therapy with cash.

Cognitive Behavior Therapy and Cash Transfers on High-Risk Young Men in LiberiaOne of the most pressing concerns in post-conflict settings is how to help individuals transition back into a peaceful life. After a conflict has subsided, small arms are usually very common, local and national economies have been destroyed, and the emotional stress of the violence begins to take on new forms. Former soldiers, in particular, have trouble with the transition as they struggle with the pain and horror of what they experienced, and many do not remember how to participate in community life anymore.  In response, the international development community often tries to “enable” these men by creating jobs for them. The theory is that if people are busy working they will not have the time or the inclination to commit crime.
 
However, simply providing jobs is rarely enough. The Network for Empowerment & Progressive Initiative (NEPI), an organization operating in Monrovia, Liberia, challenges this paradigm and seeks to support men formerly engaged in the country’s two civil wars by rehabilitating them through therapy.  
 
Klubosumo Johnson Borh, the founder of NEPI, was as a Liberian teenager when he was recruited for Charles Taylor‘s infamously brutal rebel army. Borh was made a commander and oversaw soldiers who were even younger than he was. By the end of the conflict, which lasted from 1989 through 2003, nearly 10% of the population had been killed, and thousands of child soldiers were now grown men.  Many of these men had trouble shaking the violent behaviors they had learned in war so Borh helped start NEPI in an effort to reform these and other troubled men.

Philippines: One Year after Typhoon Haiyan: Social Protection Reduces Vulnerabilities to Disaster and Climate Risks

Mohamad Al-Arief's picture
  • Countries can respond to natural disasters better and assist victims faster if  social protection systems are in place
  • Social protection systems have a role  in addressing the human side of disaster and climate risks.
  • Global collaboration on mitigating disaster and climate risk through social protection systems  facilitates solutions
Social protection specialists, disaster risk managers, risk finance practitioners and climate change experts at the World Bank Group sat down together recently to discuss the role of social protection systems in addressing the human side of disaster and climate risks.
 
Together with government counterparts and donor partners, they extracted lessons and came out with a compelling message: countries can respond to natural disasters better and assist victims faster if robust social protection systems are in place.

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