Are the same objections to cash transfers also getting in the way of aid reform?

Cash transfers are nothing new, though there’s a lot of hub-bub about them this week in the popular media. One researcher and blogger publishes a paper and, voilà, the next development trend is born!

Don’t get me wrong. Chris Blattman’s research in Uganda is exciting. As a person who has been focused on community development for much of her career, I’m enthusiastic whenever micro-level results can influence macro-level thinking and approaches to development. But two perceptions seem to get in the way of cash transfers (and aid reform for that matter), one fueled by the other—1) they’ll never work 2) because poor people can’t be trusted.

Sorry naysayers, cash works. Blattman’s research joins a host of other studies, evaluations, and reviews that largely point to proven results. Since the turn of the century, there has been a growing consideration and use of cash transfers among bilateral and multilateral donors like USAID, DFID, GTZ, World Bank and the UN as a means of channeling spending to the very poor—supporting people’s own efforts to climb out of poverty and providing a stimulus to local economies. Organizations like Oxfam, Plan, Save the Children, and HelpAge have been using cash transfers within their development and especially social protection programming for years. This trend is also increasingly used in humanitarian relief operations.

From Oxfam America’s perspective, cash transfers fit squarely in a rights-based viewpoint on social protection, or the broad system of public actions put in place to protect and transform the livelihoods of citizens. Also, handing over cash, as opposed to seeds or shoes, enables people to make their own life choices. So a more widely-recognized trend that unconditional cash transfers should no longer be dismissed will be welcome.

So with the results in hand, highlighted by this week’s coverage, why is there still resistance to putting more money directly in people’s hands in the developing world? Blattman explains it this way:

“We don’t trust the poor…to spend that kind of money responsibly. We want to tie their hands, or make the decisions for them, or at least make them dig useless ditches for three months in exchange for cash.”

In my years in the aid sector, I’ve seen this much too often, despite the fact that in this country, social security payments, unemployment or disability payments come in the form of cash or checks. In February, I participated in an online presentation sponsored by USAID on the results from The Listening Project, a comprehensive study of the ideas and insights of 6,000 people who live in societies that have been on the recipient end of international assistance efforts. As I was monitoring the comments, I noted the following statement from a fellow aid worker (preceded by a face palm and many objections):

“Do beneficiaries KNOW WHAT THEY NEED? Careful, they can only have short-term views.”

Oxfam’s own programming results prove otherwise. Back in 2005, when Oxfam surveyed cash grant recipients in Malawi (who received them in lieu of food assistance), we found they mainly bought staple foods with the grants. Where they didn’t, the results were interesting. Some bought vegetables rather than cereals (better nutrition). Some bought soap (better hygiene). A few bought tools (livelihoods investments). The bottom line is that they made smart trade-offs with the money, sacrificing some food for other really important goals.

Cash transfer programming, as a modality to deliver aid, is squarely in line with USAID’s reform efforts to increase the percentage of development aid funds that go directly to the poorest people. The USAID blog last year even extorted the need to focus on mobile money, rather than hard cash, in order to make these programs more cost-effective, less vulnerable to “leakage,” and more safe and equitable in its distribution.

So while Blattman’s research doesn’t blow the world open for many of us working in aid, it does beg the policy question…what are the other barriers to changing the modalities of big aid money? Even as reforms seem to be enabling the US to become a better development partner, how can we challenge the remaining bureaucratic mindsets that only see obstacles to responding to country- and citizen-determined needs? What’s needed to educate those who hold the purse strings?