Why cash transfers?

Cash transfers have arguably the strongest existing evidence base among anti-poverty tools.

Evaluations of cash transfer programs demonstrate that they lead to immediate and long-term relief from poverty:

  • They enable households to pay for essential items such as food, shelter and cleaning products.
  • They lead to family-wide health benefits: they reduce stunting and under-weight in children, HIV rates and psychological distress.
  • They increase schooling and decrease child labour.
  • They allow households to save and invest for future increased earnings.
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Cash Transfers drive economic activity in communities, benefiting non-recipients and promoting social cohesion.

“Every dollar given to a household boosts local GDP by $2.60.” A 10,000 household study in western Kenya involving cash transfers found that “unconditional handouts benefit recipients and their neighbours too.”
The Economist, 2019
Cash Transfers are not abused by recipients.

Despite stereotypes that poor households will use cash transfers to buy alcohol, tobacco and other “temptation goods,” studies consistently show no significant impact or a significant negative impact of transfers on such spending.
Food vouchers or in-kind food aid is often not a better option.
In-kind aid programmes often result in:

  • More over-head costs (and therefore less money getting to those in need).
  • Goods increasing in price as recipients have fewer traders to pick from resulting in less market competition.
  • Recipients selling food for cash, at a loss.
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Cash transfers increase health, wealth & wellbeing

Cash transfers programs are being used in COVID-19 response around the world.

Cash transfers were used in previous health crises, including Ebola in Sierra Leone and Liberia

The IMF recommends cash transfers as a fiscal policy for the current crisis

95 countries have already introduced or expanded cash programs for COVID-19

Few examples of use for COVID relief elsewhere:

Country Program
Argentina $155 to informal workers
Ecuador US$60 to informal workers
India (Uttar Pradesh) Compensation to poor workers who have lost their jobs due to COVID-19
Indonesia US$14 per month to low-income households
Morocco Compensation for informal sectors workers

“Cash transfers serve as an effective safety net for the poorest, helping households that have very few other means of protecting themselves to alleviate the worst effects of poverty.”

Oxford Policy Management, 2018

“[For refugees in Kenya] the cash-based transfer is more cost efficient than food transfers. In 2017, the total cost of delivering US$1 to beneficiaries was USD$1.18 for the cash based transfers compared to US$1.94 for the in-kind food transfers.”

WFP Kenya, 2018

“Syrian refugees in Jordan and Lebanon who received unrestricted cash had similar or better food security than those who received food vouchers… Not only did cash do no harm, but refugees who received unrestricted cash found that they could buy food in greater quantity and variety, and they reported a greater sense of empowerment.”

BCG, 2017