Tuesday, April 12, 2011

DFID issues a new report on cash transfer programs

Governments around the world are implementing a new strategy to fight poverty called "cash transfer" programs. They are called cash transfer because they give a small amount of money to families below the poverty line. The money is small enough that they will not be able to live on that money alone and will still need to find work. Still, the money is more than welcome to poor families who can then use it to supplement other incomes and have more money for food and medicine.

The most famous of the cash transfer programs is based in Brazil called "Bolsa Familia." The Brazilian government has an added feature to their cash transfer program because families have to meet certain conditions before receiving the money. The conditions range from keeping good attendance in school, or going for medical checkups regularly. Many governments around the world have borrowed from Bolsa Familia to set up their own cash transfer programs.

Cash Transfer programs are beginning to catch the attention of rich donor nations for their development aid contributions. The UK’s Department for International Development has just released a study on the effectiveness of cash transfer programs. OXFAM's Duncan Green relayed the summary of the report in his blog, From Poverty to Power.

“Over the past 15 years, a ‘quiet revolution’ has seen governments in the developing world invest in increasingly large-scale cash transfer programmes. These are now estimated to reach between 0.75 and 1 billion people. While this expansion began in middle-income countries (MICs), governments in low-income countries (LICs) have also started to develop cash transfer programmes.

This rapid spread has been driven by a range of forces. Firstly, there is growing recognition that while global economic integration brings poor households opportunities, it also brings increased exposure to stresses (e.g. volatile food and fuel prices) and shocks, which can push many into poverty. In this context, transfers are seen to play a role in reducing transitory poverty.

Secondly, there is growing evidence that transfers can help people escape chronic, often inter-generational poverty; in part by leveraging gains in non-income, human development outcomes.

Finally, there is recognition that in situations of chronic food insecurity (e.g. Ethiopia), institutionalised transfer programmes are more efficient and effective than repeated annual emergency food aid.

There is convincing evidence from a number of countries that cash transfers can reduce inequality and the depth or severity of poverty. There is an increasing volume of research into how cash transfers might support ‘graduation’ from poverty for those of working age. Evidence from Bangladesh and Ethiopia suggests that transfers are unlikely to achieve graduation without complementary interventions (e.g. skills training or agricultural extension) to promote livelihoods.

There is robust evidence from numerous countries that cash transfers have leveraged sizeable gains in access to health and education services…. Cash transfers also have a proven role in supporting specific vulnerable groups (people living with HIV and AIDS, orphans and vulnerable children).

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