The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

Giving cash to people: Why the attention now?

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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.

Dienabou Diamanka, left, holds her baby brother Ibrahima Diaw, while Ibrahima's mom Rouby Ndiaye (in green) and other family members watch on in Tankanto Escale village, Senegal last year. Their family participated in the Oxfam/FODDE cash program. Her father, Alassane Diaw, said, “Cash is better than food. With cash, I can choose to buy fish and rice; people receiving food don’t have this possibility. [And] there is another reason the cash is useful: if one of my children is sick, I can use this money to go to the hospital. Without money, I cannot go.”
Dienabou Diamanka, left, holds her baby brother Ibrahima Diaw, while Ibrahima’s mom Rouby Ndiaye (in green) and other family members watch on in Tankanto Escale village, Senegal in 2012. Their family participated in the Oxfam/FODDE cash program. Dienabou and Ibrahima’s father, Alassane Diaw, told Oxfam last year, “Cash is better than food. With cash, I can choose to buy fish and rice; people receiving food don’t have this possibility. [And] there is another reason the cash is useful: if one of my children is sick, I can use this money to go to the hospital. Without money, I cannot go.” Photo: Holly Pickett / Oxfam America
Clearly “assumptions about whom the poor are, what they need, and how they should be helped” serve as a barrier to not only cash transfers, but to aid reform in general. In the same way that a “poor-people-are-not-to-be-trusted” attitude can impede cash programming, corruption is often attributed to this same “other.” At Oxfam, this is an often-heard objection to country ownership. But discussing corruption without looking at ourselves and how policies and agency policies feed it is short-sighted at best. People can set their own priorities and choose the strategies—that’s what cash does and that’s what aid can do.

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?

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  1.  avatarChris Blattman

    So many people have asked me about this post I thought I’d write a response.

    I expected a lot of push back from the aid community on this paper, but what has surprised me is that very few people have said “I don’t believe this result generalizes”. If anything, some of the comments have been along Jennifer’s line, saying, “we already know cash works”.

    On the one had, I’m thrilled and agree: there is a wealth of rigorous evidence showing the beneficial effects of conditional cash transfer programs (CCTs in the acronym-filled development world). So many studies, in fact, that some first-rate researchers at the World Bank have written a whole book (free to download) on the positive impacts of CCTs.

    I’ll disagree in two ways, though. One is that a good many people have looked at the evidence and feel optimistic about cash. But my sense is that the people like those Jennifer highlights are the exception and not the rule.

    Most of all, governments and NGOs want to give away cash on condition, or with lots of hands-on follow up or accountability, some of which is not very cost effective. We really don’t have much evidence at all on unconditional transfers. Here I expect a lot of skepticism from the aid community–well-deserved skepticism, at least until we have more studies.

    My second counter-argument is this: everything we have on CCTs show they go directly into current spending, precautionary savings, or investments in children. This is terrific, but this doesn’t raise the short or medium-run earning potential of households. It doesn’t necessarily change the lifetime income stream of the people receiving the transfers (except to the extent their kids earn more 20 years down the road). It doesn’t help shift economies from agriculture into cottage industry.

    What’s striking is that almost none of these CCT studies look to see whether the windfalls were invested in productive enterprise. At root are some of the deepest questions in development: What constrains entrepreneurship? What holds back “occupational choice”–the decision to be self-employed and in what sector? What prompts structural change from agriculture to industry? This is the basic process of development that CCTs haven’t illuminated.

    This point comes across more clearly in the paper than my blog post. We try to frame what we’ve learned relative not only to CCT programs but also to asset transfer, training and business grant programs and evaluations.

    But the basic point–that any paper stands on the shoulders of giants–is still correct, and ours is just one contribution to a literature that tells us the power of cash to transform lives. It ought to make us skeptical of the cost-effectiveness of the alternatives, enough to test which services actually “add value” in the sense that they make at least as large a difference in the lives of the poor as the cash grant alternative. Otherwise we ought to get out of the way.

    Reply
  2. Pingback: Why all the attention to cash transfers now? | Chris BlattmanChris Blattman

  3.  avatarWeh Yeoh (@wmyeoh)

    I think this is a really good summary of the issues Jennifer. There is strong evidence there, but why is there still so much hesitation and face-palm-inducing attitudes, like the one you described?

    For me, a key factor is still this lack of trust, which comes from our own perception of poverty and who is to blame. I think that how we apportion “blame” for poverty really affects the types of programs that we do for poor people. As I mentioned in this WhyDev post, in Just Give Money to the Poor: The Development Revolution from the Global South, a question was asked about “Who is to blame for poor people being poor: society as a whole, or poor people themselves?”

    In the US, 61% blamed poor people themselves, and 39% blamed an unfair society. As a major international donor, this must play on how development assistance is given. Despite evidence, underlying attitudes towards poor people persist.

    The full graph is here:
    http://www.whydev.org/how-would-you-make-aid-and-development-better/

    Reply
  4.  avatarSamreen M

    Yes, cash is better than providing them edibles. If the aid is given, it must be given in the way that they should have at least the right to make decisions of their own lives; what to eat, wear etc. The article ends up with a question that what is needed to educate those who hold the purse strings; I think Alassana Diaw’s reply is enough to educate them.

    Reply

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