Cash transfers: global development’s “quiet revolution”

Cash transfer programmes empower poor people in developing countries to take control over their own lives. DiA blogger Hannah Loryman explores why they’re so successful

People in India tend to spend money on healthcare. Photo by Irekia/ Creative Commons

People in India tend to spend money on healthcare. Photo by Irekia/ Creative Commons

Over the past 15 years there has been a “quiet revolution” in development. Not in the form of ground breaking technological advancements or complicated new theories. Instead, the idea is simple: give money directly to the people who need it, through cash transfers. These are a key component of social protection: policies to protect the poor which include non-contributory pensions, health insurance and other benefits. Originally these were mainly implemented in middle income countries; however, low income countries are increasingly introducing programmes of their own (although they are often donor funded). Successful programmes across Latin America, Asia and Africa have demonstrated the potential of cash transfers to reduce poverty and vulnerability.

Critics of cash transfers use similar arguments to those who oppose welfare payments in developed countries. They argue that they will increase dependency, lead to laziness, cause people to have more children and that the money will be spent incorrectly. There is no reason to assume that poor people cannot make the best choices about how to spend their money: yet this is often the assumption that is made. Evidence is increasingly showing us that people do not waste cash transfers, instead making sensible choices which make life better for them. For example in Malawi, a cash transfer programme was introduced in place of food aid. The recipients did not all spend the money on food: some spent on soap or tools. Similarly in India, a study found that people chose to spend their money on health care, education and food. As a result malnutrition fell, women were able to access health facilities and the proportion of children who went to and stayed in school increased.

The ability to choose is not only important because each individual knows what they and their families need, but also because being able to choose and make decisions has intrinsic value. The ability to choose what you spend your money on is important, but it is not full empowerment. If cash transfers are to be truly empowering they need not only to provide people with material choice but also to give them power over their lives in other domains.

Some villages have obtained water pumps from the programmes. Photo: Nathan Laurell/ Creative Commons

Some villages have obtained water pumps from the programmes. Photo: Nathan Laurell/ Creative Commons

Consequently, some cash transfer programmes are going further by empowering people to claim their rights and hold officials to account. Kenya’s Hunger Safety Net programme consists of a “Social Protection Rights” component, introduced by HelpAge International. The programme reframes social protection as a right which can be claimed, rather than an act of charity. “Rights committees”, which consist of local representatives, educate people about their rights, provide a space in which people can express their voice and enable people to hold service providers to account. Citizens are able to make complaints about the programme individually, in a group or as a community. By acting collectively individuals cannot be stigmatised and people are less likely to feel powerless. A major success of the programme is that it has not just caused people to demand their right to cash transfers, but their empowerment and participation has extended to other domains. For example, in some villages citizens have used the rights committees to demand better services from the local authority. Different villages have been successful in obtaining rafts, health care facilities and water pumps.

Cash transfers are not a magic fix for development. They do not address many of the underlying causes of poverty and there are still a number of debates about how they can be financed or how they should be best implemented. But by providing cash directly to the poor they are not only able to bypass corrupt or inefficient systems, but also to give people more control of their own lives. In addition, if cash transfers can be grounded in rights and introduced alongside effective participation, they can give people a voice and empower them to effect the change they want.


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.


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