Back to List

Cash transfers: not “whether,” but “how”

Many people think that simply giving money directly to the poor is a radical new idea. We’re flattered, but the reality is: it isn’t. Over the last decade, cash transfers have quietly become one of the most widely used poverty-fighting tools in the toolkits of aid agencies and emerging market governments. If the question about cash ten years ago was “whether,” the question now is “how.”

I saw this personally on a recent trip to Nairobi where I met with government officials and counterparts in a variety of donor institutions. I spoke with teams working to build Kenya’s National Safety Net Program (NSNP), the foundation for a broad social protection policy that aims to provide a cushion to the most vulnerable members of society (orphans, elderly, and disabled). The chosen instrument of assistance is not food, livestock, or subsidies, but cash — cash that is delivered directly to the poor via bank or post office accounts, with no strings attached. (Note that Kenya is not alone in this respect: the governments of Uganda, Zambia, Botswana, South Africa and Mozambique, to name a few, have all implemented or made plans to implement national cash transfer programs.)

A striking feature of the discussions I had in Nairobi was the absence of a “Should we give cash?” debate. The majority of policy-makers I spoke with accepted the important role of cash transfers in social protection and humanitarian assistance. Senior technocrats in Ministries and Secretariats cited the value of direct transfers as a means of reducing corruption, a goal that features prominently on their agendas. In my discussions with the teams working to build NSNP, the debate focused almost entirely on questions of how to implement cash transfer programs effectively:

  • Access — How do we deliver electronic payments in the most remote parts of the country?
  • Sustainability – How do we use technology to cut program costs and ensure long-term financing?
  • Scale — How do we create systems that can rapidly achieve broad coverage in an emergency?
  • Design — Do community-based targeting strategies produce accurate and fair outcomes?

I found our colleagues at donor institutions like UNICEF, UK’s Department for International Development, and World Food Programme asking the same questions. How can cash transfers fit into broader strategies for delivering outcomes on food insecurity, child and maternal nutrition, and resilience-building? How can these strategies be operationalized at scale? WFP, as the largest distributor of food aid globally, turns out to be one of the leading innovators on cash transfers; roughly one third of WFP’s aid is now distributed in the form of cash, not food. In Kenya, for example, WFP is partnering with banks and credit card companies to deliver cash transfers to highly vulnerable, drought-affected populations. Other institutional donors like UNHCR are exploring ways to augment the impact and efficiency of cash transfer programs in challenging settings like refugee camps.

I am excited about the unique role GiveDirectly has to play in answering these “how” questions: through technology, research and our operating platform in East Africa, we have the ability to experiment with new ways to deliver cash transfers and rigorously assess outcomes. We look forward to keeping you updated on what we learn.