The Great Recession of 2008 prompted many traditional donor countries to cut back foreign aid budgets. Pressure from lawmakers is now greater than ever for aid dollars to go further, and for development programmes to prove that aid is linked to tangible changes in the lives of children in the poorest regions of the world. Well, it turns out that one of the most effective of all ways of changing the lives of the poor could be handing out cash.
That’s right. For a long time now the development world has been looking into the benefits of various methods of simply giving the poorest families cash. One theory is that rather than investing large amounts in costly and wasteful State bureaucracies, delivering small amounts of cash to materially deprived households could be a much more efficient and flexible way to provide aid directly where it is needed most. Now, especially in Africa, data is piling up which may prove the theory right.
The UNICEF Office of Research – Innocenti is currently supporting an in-depth, long term research partnership to scientifically measure the impact of cash transfer programmes across a wide stretch of sub-Saharan Africa. Using rigorous impact evaluation standards, hard evidence is mounting up that tiny monthly cash transfers can bring about significant improvements for children, especially in the most remote rural communities where services are limited or non-existent.
Here is a fascinating table showing the impact of the Zambian Government’s Child Support Grant programme – a US$12/month unconditional payment targeting households with young children in Zambia’s three poorest districts. In key indicators of material poverty, early child development, income generation and agricultural productivity, significant, tangible improvements were found to be related to cash transfers, not other factors.
Zambia is one of 13 countries involved in the Transfer Project impact evaluation in sub-Saharan Africa. There are now at least 30 social protection programmes in this region based on long term application of cash transfer strategies. And in 19 of them there are rigorous evaluations of the impact on the most vulnerable children underway. When current impact evaluations are complete the world may well look to Africa to find the most up-to-date research on the possible impact of cash transfers.
Having first emerged in Latin America in the 1990’s, cash transfer programmes in Africa are now sparking important social gains in food security, school attendance and promotion of young people’s safe transition to adulthood. One impact assessment of the Child Support Grant in South Africa has shown statistically significant associations between receipt of the grant and adolescents reduced sexual activity, reduced pregnancy and reduced alcohol and drug use.
Research findings on cash transfers are beginning to spark talk of the development “silver bullet.” Sudhanshu Handa, social policy expert with the UNICEF Office of Research – Innocenti, recently took part in a Washington DC debate titled “Cash Transfers: The New Benchmark for Foreign Aid?” where questions such as “When are cash transfers better than traditional aid?” and “Should aid be benchmarked against the cost effectiveness of cash transfers?” were thrashed out.
In a period of austerity cost effectiveness of development aid is more critical than ever. The development community can now look to Africa for hard-nosed evidence on the impact of cash transfers.